PRINTER'S NO. 3279
No. 2435 Session of 2000
INTRODUCED BY ROBINSON, APRIL 3, 2000
REFERRED TO COMMITTEE ON URBAN AFFAIRS, APRIL 3, 2000
AN ACT
1 Providing for the financial stability of cities of the second
2 class; establishing an authority empowered to assist cities
3 of the second class in their financial affairs and to issue
4 findings and recommendations to cities of the second class
5 and to the General Assembly; providing for powers and duties
6 of the authority; authorizing each city of the second class
7 and the authority to enter into intergovernmental cooperation
8 agreements and specifying certain terms of such agreements
9 and ordinances whereby cities of the second class enter into
10 such agreements; empowering the authority to incur
11 indebtedness, receive revenues, acquire the obligations of
12 assisted cities, make loans and offer other financial
13 assistance to such cities subject to conditions; establishing
14 procedures for the preparation and review of financial plans
15 of cities of the second class while bonds of the authority
16 are outstanding and providing remedies for failure to adhere
17 to such plans; requiring certain contracts to be consistent
18 with the financial plan; making certain provisions with
19 respect to short-term borrowing by cities of the second
20 class; establishing procedures for handling authority funds,
21 and providing for certain payments to the authority;
22 providing security for bonds and notes issued by the
23 authority; authorizing the creation of a debt service reserve
24 fund and providing for its maintenance; granting to the
25 holders of the authority's indebtedness and to the authority
26 certain remedies in the event of default by the authority or
27 by an assisted city on authorized obligations; authorizing
28 cities of the second class to receive financial assistance
29 from the authority under certain terms and conditions;
30 establishing the method for the appointment and composition
31 of the authority board; prohibiting the authority and
32 assisted cities from filing a petition under Federal
33 bankruptcy statutes; authorizing an appropriation for
1 authority operating expenses; authorizing cities of the
2 second class to impose an optional sales and use tax;
3 authorizing cities of the second class to impose certain
4 taxes for the authority; creating the Second Class City Sales
5 and Use Tax Fund and the Second Class City Fiscal Authority
6 Tax Fund; authorizing emergency payment deferral; providing
7 jurisdiction for challenges to this act; making an
8 appropriation; and making a repeal.
9 TABLE OF CONTENTS
10 Chapter 1. General Provisions
11 Section 101. Short title.
12 Section 102. Purpose and legislative intent.
13 Section 103. Legislative findings.
14 Section 104. Definitions.
15 Chapter 2. Second Class City Fiscal Authority
16 Section 201. Authority created.
17 Section 202. Governing board.
18 Section 203. Powers and duties.
19 Section 204. Term of existence of authority.
20 Section 205. Fiscal year.
21 Section 206. Annual budget of authority.
22 Section 207. Annual report to be filed; annual audits.
23 Section 208. Authority's financial assistance to cities.
24 Section 209. Financial plan of an assisted city.
25 Section 210. Powers and duties of authority with respect to
26 financial plans.
27 Section 211. Limitation on authority and on assisted cities
28 to file petition for relief under Federal
29 bankruptcy law.
30 Section 212. Sovereign immunity.
31 Chapter 3. Bonds and Funds of Authority
32 Section 301. Bonds.
33 Section 302. Exemption from taxation.
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1 Section 303. Validity of bonds; limitation on actions.
2 Section 304. Provisions of bonds; trust indentures.
3 Section 305. Remedies of obligee of authority.
4 Section 306. Validity of pledge.
5 Section 307. Commonwealth pledges.
6 Section 308. Resolution and law are contracts with holders of
7 bonds.
8 Section 309. Bonds to be legal investments.
9 Section 310. Right to enforcement of pledge of revenues.
10 Section 311. Funds of authority; sources of revenue.
11 Section 312. Payment of proceeds of tax levied for authority
12 purposes.
13 Section 313. Debt service reserve fund.
14 Section 314. Bond payment account and city account.
15 Section 315. Other funds and accounts.
16 Section 316. Exchange of bonds for obligations of city.
17 Section 317. Initial issue of authority bonds.
18 Section 318. Payment of taxes with authority bonds.
19 Section 319. Final date for issuance of bonds.
20 Section 320. City payment of authority bonds.
21 Chapter 4. Tax Anticipation Notes
22 Section 401. Tax anticipation notes of cities of second class.
23 Section 402. Limitation on amount of tax and revenue
24 anticipation notes.
25 Section 403. Limitation on stated maturity date of tax and
26 revenue anticipation notes; time of payment of
27 interest.
28 Section 404. Other terms of tax and revenue anticipation notes.
29 Section 405. Security for tax and revenue anticipation notes;
30 sinking fund or trust fund.
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1 Section 406. Certification as to taxes and revenues to be
2 collected.
3 Section 407. Sale of tax anticipation notes.
4 Section 408. Filing of proceedings with authority.
5 Section 409. Purchase of tax anticipation notes by authority.
6 Section 410. Failure to pay principal or interest.
7 Section 411. Remedies of holders of tax and revenue
8 anticipation notes.
9 Chapter 5. Optional Sales and Use Tax
10 Section 501. Definitions.
11 Section 502. Construction of chapter.
12 Section 503. Imposition of additional tax.
13 Section 504. Situs for imposition of tax.
14 Section 505. Licenses.
15 Section 506. Rules and regulations.
16 Section 507. Exclusion from rate limitations.
17 Section 508. Procedure and administration.
18 Section 509. Dedication and disbursement.
19 Chapter 6. Second Class City Fiscal Authority Tax
20 Section 601. Imposition of authority tax.
21 Section 602. Duration of tax.
22 Section 603. Creation of fund and disbursement.
23 Section 604. Collection of Second Class City Fiscal Authority
24 Taxes.
25 Chapter 7. Miscellaneous Provisions
26 Section 701. Appropriation.
27 Section 702. Original and exclusive jurisdiction of Supreme
28 Court.
29 Section 703. General rights and prohibitions.
30 Section 704. Nondiscrimination.
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1 Section 705. Emergency payment deferral.
2 Section 706. Construction of act.
3 Section 707. Limitation of authority powers.
4 Section 708. Repeals.
5 Section 709. Effective date.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 CHAPTER 1
9 GENERAL PROVISIONS
10 Section 101. Short title.
11 This act shall be known and may be cited as the Second Class
12 City Fiscal Authority Act.
13 Section 102. Purpose and legislative intent.
14 (a) Policy.--It is hereby declared to be a public policy of
15 the Commonwealth to exercise its retained sovereign powers with
16 regard to taxation, debt issuance and matters of Statewide
17 concern in a manner calculated to foster the fiscal integrity of
18 cities of the second class to assure that these cities provide
19 for the health, safety and welfare of their citizens; pay
20 principal and interest owed on their debt obligations when due;
21 meet financial obligations to their employees, vendors and
22 suppliers; and provide for proper financial planning procedures
23 and budgeting practices. The inability of a city of the second
24 class to provide essential services to its citizens as a result
25 of a fiscal emergency is hereby determined to affect adversely
26 the health, safety and welfare not only of the citizens of that
27 municipality but also of other citizens in this Commonwealth.
28 (b) Legislative intent.--
29 (1) It is the intent of the General Assembly to:
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1 (i) provide cities of the second class with the
2 legal tools with which such cities can eliminate budget
3 deficits that render them unable to perform essential
4 municipal services;
5 (ii) create an authority that will enable cities of
6 the second class to access capital markets for deficit
7 elimination and seasonal borrowings to avoid default on
8 existing obligations and chronic cash shortages that will
9 disrupt the delivery of municipal services;
10 (iii) foster sound financial planning and budgetary
11 practices that will address the underlying problems which
12 result in such deficits for cities of the second class,
13 which city shall be charged with the responsibility to
14 exercise efficient and accountable fiscal practices, such
15 as:
16 (A) increased managerial accountability;
17 (B) consolidation or elimination of inefficient
18 city programs;
19 (C) recertification of tax-exempt properties;
20 (D) increased collection of existing tax
21 revenues;
22 (E) privatization of appropriate city services;
23 (F) sale of city assets as appropriate;
24 (G) improvement of procurement practices
25 including competitive bidding procedures; and
26 (H) review of compensation and benefits of city
27 employees; and
28 (iv) exercise its powers consistent with the rights
29 of citizens to home rule and self-government.
30 (2) The General Assembly further declares that this
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1 legislation is intended to remedy the fiscal emergency
2 confronting cities of the second class through the
3 implementation of sovereign powers of the Commonwealth with
4 respect to taxation, indebtedness and matters of Statewide
5 concern. To safeguard the rights of the citizens to the
6 electoral process and home rule, the General Assembly intends
7 to exercise its power in an appropriate manner with the
8 elected officers of cities of the second class.
9 (3) The General Assembly further declares that this
10 legislation is intended to authorize the imposition of a tax
11 or taxes to provide a source of funding for an
12 intergovernmental cooperation authority to enable it to
13 assist cities of the second class and to incur debt of such
14 authority for such purposes; however, the General Assembly
15 intends that such debt shall not be a debt or liability of
16 the Commonwealth or a city of the second class nor shall debt
17 of the authority payable from and secured by such source of
18 funding create a charge directly or indirectly against
19 revenues of the Commonwealth or a city of the second class.
20 Section 103. Legislative findings.
21 It is hereby determined and declared as a matter of
22 legislative finding:
23 (1) That cities of the second class have encountered
24 recurring financial difficulties which may affect the
25 performance of necessary municipal services to the detriment
26 of the health, safety and general welfare of residents of
27 such cities.
28 (2) That, due to the economic and social
29 interrelationship among all citizens in our economy, the
30 fiscal integrity of cities of the second class is a matter of
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1 concern to residents of the entire Commonwealth, and the
2 financial problems of such cities have a direct and negative
3 effect on the entire Commonwealth.
4 (3) That, because cities of the second class consume a
5 substantial proportion of the products of Pennsylvania's
6 farms, factories, manufacturing plants and service
7 enterprises, economic difficulties confronting cities of the
8 second class detrimentally affect the economy of the
9 Commonwealth as a whole and become a matter of Statewide
10 concern.
11 (4) That, because residents of cities of the second
12 class contribute a substantial proportion of all Commonwealth
13 tax revenues, a disruption of the economic and social life of
14 such cities may have a significant detrimental effect upon
15 Commonwealth revenues.
16 (5) That cities of the second class and the Commonwealth
17 have shown a willingness to cooperate in order to address
18 important financial and budgetary concerns.
19 (6) That the financial difficulties of cities of the
20 second class can best be addressed and resolved by
21 cooperation between governmental entities.
22 (7) That the Constitution of Pennsylvania grants
23 municipalities authority to cooperate with other governmental
24 entities in the exercise of any function or responsibility.
25 (8) That the Commonwealth retains certain sovereign
26 powers with respect to cities of the second class, among them
27 the powers to authorize and levy taxes, to authorize the
28 incurring of indebtedness and to provide financial assistance
29 that may be necessary to assist cities in solving their
30 financial problems.
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1 (9) That the Commonwealth may attach conditions to
2 grants of authority to incur indebtedness or assistance to
3 cities of the second class in order to ensure that deficits
4 are eliminated and access to capital markets is maintained.
5 (10) That such conditions shall be incorporated into
6 intergovernmental cooperation agreements between the
7 Commonwealth or its instrumentalities and cities of the
8 second class.
9 (11) That cities of the second class and the
10 Commonwealth will benefit from the creation of an independent
11 authority composed of members experienced in finance and
12 management which may advise such cities, the General Assembly
13 and the Governor concerning solutions to fiscal problems
14 cities of the second class may face.
15 (12) That the creation of such an authority with the
16 power to borrow money and issue bonds in order to assist
17 cities of the second class will allow such cities to continue
18 to provide the necessary municipal services for their
19 residents and to contribute to the economy of the
20 Commonwealth.
21 (13) That, in order for an authority to effectively
22 assist cities of the second class in financing their cash
23 flow needs and for cities of the second class to be able to
24 cost-effectively finance their cash flow needs during the
25 term of any authority bonds and thereafter, the enactment of
26 certain provisions of law in connection with the issuance of
27 tax and revenue anticipation notes of cities of the second
28 class is necessary and desirable.
29 (14) That a dedicated source of funding for the
30 authority is necessary in order to address the immediate
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1 financial difficulties of cities of the second class.
2 (15) That the Commonwealth's action in authorizing
3 cities of the second class to impose taxes for the authority
4 will allow such cities to continue to provide necessary
5 services for their residents and for those nonresidents
6 enjoying the benefits of such services.
7 (16) That the levy of a tax within cities of the second
8 class for the authority should be authorized by the
9 Commonwealth for the benefit of cities of the second class,
10 with the revenue produced as a result of such levy being
11 Commonwealth-authorized revenues and revenues of a State
12 authority, and not revenues of the city of the second class.
13 (17) That the authority to levy a tax only within cities
14 of the second class or at a rate that is higher than that
15 imposed outside cities of the second class is based upon a
16 legitimate classification which the General Assembly deems to
17 be reasonable and just since the benefit received by
18 taxpayers in cities of the second class as a result of such
19 levy is determined to be in proportion to the tax burden
20 imposed in such cities of the second class.
21 (18) That a levy imposed only, or at a higher rate, in
22 cities of the second class will be used to benefit citizens
23 of cities of the second class by providing for their health,
24 safety, convenience and welfare.
25 (19) That if this act is challenged, a prompt, final
26 ruling as to the legality of the authority created by this
27 act and the validity of bonds issued by the authority will be
28 necessary so that the authority will be able to enter capital
29 markets to assist cities of the second class.
30 Section 104. Definitions.
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1 The following words and phrases when used in this act shall
2 have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 "Assisted city." A city of the second class which receives
5 assistance from the Second Class City Fiscal Authority created
6 by this act.
7 "Authority." The Second Class City Fiscal Authority
8 established in this act.
9 "Board." The governing board of the Second Class City Fiscal
10 Authority.
11 "Bond." A note, bond, refunding note and bond, interim
12 certificate, debenture and other evidence of indebtedness or
13 obligation which an authority is authorized to issue pursuant to
14 this act.
15 "Bond payment account." A trust fund held exclusively for
16 the equal and ratable benefit of the holders of bonds of the
17 Second Class City Fiscal Authority, as described in section
18 314(a) and (b).
19 "Cash flow deficit." A cash deficit occurring solely because
20 revenues and expenditures, even when in balance on a fiscal year
21 basis, are not received and disbursed at equivalent rates
22 throughout the fiscal year.
23 "City." A city of the second class.
24 "City account." A trust fund held for the exclusive benefit
25 of an assisted city as described in section 314(c).
26 "Corporate entity." An authority or other corporate entity
27 of which one or more of the members of its governing board is
28 appointed by the mayor of a city and which performs governmental
29 functions for a city.
30 "Debt service reserve fund." A fund which may be created by
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1 the authority and which shall be used, when required, solely for
2 the payment of the principal of bonds secured in whole or in
3 part by such fund, or of the sinking fund payments, if any, with
4 respect to such bonds, the purchase or redemption of such bonds,
5 the payment of interest on such bonds or the payment of any
6 redemption premium required to be paid when such bonds and notes
7 are redeemed prior to maturity, as described in section 313.
8 "Deficit." Such negative fund balance in any principal
9 operating fund or funds of a city existing or projected to exist
10 as of the close of a fiscal year, as may be more specifically
11 identified, calculated and set forth in an intergovernmental
12 cooperation agreement or financial plan of an assisted city
13 described in section 209.
14 "Federal agency." The United States of America, the
15 President of the United States of America and any department or
16 corporation, agency or instrumentality heretofore or hereafter
17 created, designated or established by the United States of
18 America.
19 "Financial ability to pay." Financial ability to pay shall
20 mean the reasonable likelihood that the assisted city will
21 receive funds sufficient to pay the cost of any increase in
22 wages or fringe benefits without requiring an increase in the
23 rates of local taxation existing in the fiscal year immediately
24 preceding the fiscal year when such increase is intended to take
25 effect and without causing an adverse effect on the levels of
26 service in the fiscal year when such increase is intended to
27 take effect.
28 "Governing body." The legislative body of a city.
29 "Government agency." The Governor, departments, boards,
30 commissions, authorities and other officers and agencies of
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1 State government, including those which are not subject to the
2 policy supervision and control of the Governor, any political
3 subdivision, municipal or other local authority, and any officer
4 or agency of any such political subdivision or local authority,
5 but the term does not include any court or other officer or
6 agency of the unified judicial system or the General Assembly or
7 its officers and agencies.
8 "Intergovernmental cooperation agreement." Any agreement
9 made by the Second Class City Fiscal Authority and a city under
10 the provisions of section 203(d).
11 "Loan committee." The mayor, the city controller and city
12 solicitor of a city of the second class.
13 "Net proceeds." The aggregate principal amount of any bonds
14 issued by the Second Class City Fiscal Authority reduced by any
15 amount of such bonds constituting interest under the Internal
16 Revenue Code of 1986 (Public law 99-514, 26 U.S.C. § 1 et seq.)
17 or any successor or amendatory revenue act and further reduced
18 by the portion of the aggregate principal amount of such bonds
19 issued for any of the following purposes:
20 (1) Fund any reserve, including a debt service reserve
21 fund, established for the Second Class City Fiscal
22 Authority's bonds.
23 (2) Provide capitalized interest on bonds.
24 (3) Pay fees or premiums in connection with any policy
25 of municipal bond insurance or other credit enhancement or
26 liquidity facility.
27 (4) Repay the amount set forth in section 701, fund up
28 to $500,000 of initial operating expenses and pay any costs
29 of issuance relating to such bonds.
30 "Obligee of the authority." Any holder or owner of any bond
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1 of the Second Class City Fiscal Authority or any trustee or
2 other fiduciary for any such holder or any provider of a letter
3 of credit, policy of municipal bond insurance or other credit
4 enhancement or liquidity facility for bonds of the authority.
5 "Outstanding." With respect to bonds of the authority, shall
6 mean all bonds of the authority issued from time to time except:
7 (1) Bonds purchased by the authority or the city for
8 cancellation by the authority or otherwise required to be
9 canceled by the authority.
10 (2) Bonds for the payment of the principal of and
11 interest on which moneys or investments sufficient to make
12 such payments timely have been irrevocably deposited with a
13 fiduciary for obligees of the authority owning such bonds.
14 "Party officer." The following members or officers of any
15 political party:
16 (1) a member of a national committee;
17 (2) a chairman, vice chairman, secretary, treasurer or
18 counsel of a State committee or member of the executive
19 committee of a State committee;
20 (3) a county chairman, vice chairman, counsel, secretary
21 or treasurer of a county committee; or
22 (4) a city chairman, vice chairman, counsel, secretary
23 or treasurer of a city committee.
24 "Public official." Any elected or appointed official or
25 employee in the executive, legislative or judicial branch of the
26 Commonwealth or any political subdivision thereof, provided that
27 it shall not include members of advisory boards that have no
28 authority to expend public funds other than reimbursement for
29 personal expense or to otherwise exercise the power of the
30 Commonwealth or any political subdivision thereof. The term
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1 "public official" shall not include any appointed official who
2 receives no compensation other than reimbursement for actual
3 expenses.
4 "Qualified majority." A majority of the governing board of
5 the Second Class City Fiscal Authority which includes any four
6 voting members.
7 "School district." A school district of the first class A.
8 "Tax anticipation notes" or "notes." Tax anticipation notes,
9 revenue anticipation notes or tax and revenue anticipation notes
10 authorized to be issued pursuant to Chapter 4 and designated as
11 prescribed in section 401.
12 CHAPTER 2
13 SECOND CLASS CITY FISCAL AUTHORITY
14 Section 201. Authority created.
15 A body corporate and politic to be known as the Second Class
16 City Fiscal Authority is hereby created as a public authority
17 and instrumentality of the Commonwealth, exercising public
18 powers of the Commonwealth as an agency and instrumentality
19 thereof. The exercise by the authority of the powers conferred
20 by this act is hereby declared to be and shall for all purposes
21 be deemed and held to be the performance of an essential public
22 function.
23 Section 202. Governing board.
24 (a) Composition of board.--The powers and duties of the
25 authority shall be exercised by a governing board composed of
26 five members:
27 (1) One member shall be appointed by the Governor.
28 (2) One member shall be appointed by the President pro
29 tempore of the Senate.
30 (3) One member shall be appointed by the Minority Leader
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1 of the Senate.
2 (4) One member shall be appointed by the Speaker of the
3 House of Representatives.
4 (5) One member shall be appointed by the Minority Leader
5 of the House of Representatives.
6 (6) The Secretary of the Budget of the Commonwealth and
7 the treasurer of each assisted city shall serve as ex officio
8 members of the board. The ex officio members may not vote,
9 shall not be counted for purposes of establishing a quorum
10 and may designate in writing a representative of their
11 respective offices to attend meetings of the board on their
12 behalf.
13 (7) All members shall have had experience in finance or
14 management.
15 (8) All members of the board shall be residents of the
16 Commonwealth and, except the Secretary of the Budget, shall
17 either be residents of the assisted city or have their
18 primary places of business or employment in such city.
19 (b) Term.--Appointing authorities shall appoint the initial
20 members of the board within ten days of the effective date of
21 this act. The term of a board member shall begin on the date of
22 appointment. A member's term shall be coterminous with that of
23 his or her appointing authority, provided that the member's term
24 shall continue until his or her replacement is appointed. Board
25 members shall serve at the pleasure of his or her appointing
26 authority. Whenever a vacancy occurs on the board, whether prior
27 to or on the expiration of a term, the appointing authority who
28 originally appointed the board member whose seat has become
29 vacant shall appoint a successor member within 30 days of the
30 vacancy. A member appointed to fill a vacancy occurring prior to
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1 the expiration of a term shall serve the unexpired term.
2 (c) Organization.--The appointee of the Governor shall set a
3 date, time and place for the initial organizational meeting of
4 the board within ten days of the appointment of the initial
5 members of the board. The members shall elect from among
6 themselves a chairperson, vice chairperson, secretary, treasurer
7 and such other officers as they may determine. A member may hold
8 more than one office of the board at any time.
9 (d) Meetings.--The board shall meet as frequently as it
10 deems appropriate but at least once during each quarter of the
11 fiscal year. In addition, a meeting of the board shall be called
12 by the chairperson if a request for a meeting is submitted to
13 the chairperson by at least two members of the board. A majority
14 of the board shall constitute a quorum for the purpose of
15 conducting the business of the board and for all other purposes.
16 All actions of the board shall be taken by a majority of the
17 board unless specific provisions of this act require that action
18 be taken by a qualified majority. The provisions of 65 Pa.C.S.
19 Ch. 7 (relating to open meetings) shall apply to the board.
20 (e) Expenses.--A member shall not receive compensation or
21 remuneration but shall be entitled to reimbursement for all
22 reasonable and necessary actual expenses.
23 (f) Public officials and party officers.--
24 (1) Except for the Secretary of the Budget of the
25 Commonwealth and the treasurer of an assisted city, neither
26 members of the board nor the executive director shall seek or
27 hold a position as any other public official within this
28 Commonwealth or as a party officer while in the service of
29 the authority. Members of the board and the executive
30 director shall not seek election as public officials or party
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1 officers for one year after their service with the authority.
2 Members of the authority and the executive director may serve
3 as appointive public officials any time after their periods
4 of service with the authority.
5 (2) Employees of the authority shall not seek or hold
6 other positions as public officials or party officers while
7 in the employ of the authority; provided, however, that the
8 authority may receive the loan of services of persons in
9 other government agencies in accordance with subsection (g),
10 notwithstanding that such persons are public officials.
11 Employees of the authority shall not seek election as public
12 officials or party officers for one year after leaving the
13 employ of the authority.
14 (g) Employees and agents.--The board shall fix and determine
15 the number of employees of the authority and their respective
16 compensation and duties. The board may contract for or receive
17 the loan of services of persons in the employ of other
18 government agencies, and other government agencies shall be
19 authorized to make such employees available. The board shall
20 retain an executive director upon the vote of a qualified
21 majority. The board shall, by the vote of a qualified majority,
22 hire an independent general counsel to the authority and may
23 engage consultants and contract for other professional services
24 upon the vote of a qualified majority. The board shall, upon the
25 approval of a qualified majority, delegate to the executive
26 director such powers of the board as the board shall deem
27 necessary to carry out the purposes of the authority, subject in
28 every case to the supervision and control of the board.
29 (h) Statutes applying to authority.--The provisions of the
30 following acts shall apply to the authority: The act of June 21,
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1 1957 (P.L.390, No.212), referred to as the Right-to-Know Law;
2 the act of July 19, 1957 (P.L.1017, No.451), known as the State
3 Adverse Interest Act; and 65 Pa.C.S. Ch. 11 (relating to ethics
4 standards and financial disclosure); provided, however, that,
5 notwithstanding the provisions of the State Adverse Interest
6 Act, the Secretary of the Budget and the treasurer of each
7 assisted city shall, while serving as ex officio members of the
8 board, also serve in their official capacities with respect to
9 the negotiation and execution of intergovernmental cooperation
10 agreements and other agreements between an assisted city and the
11 authority.
12 (i) Limitation on action.--Notwithstanding the provisions of
13 section 706, if any provision of this section is held invalid by
14 a court of competent jurisdiction, the authority shall not
15 borrow further moneys nor issue further bonds, nor shall the
16 authority further disburse to a city proceeds of any issue of
17 bonds authorized theretofore to fund a deficit of a city or to
18 provide other financial assistance to a city; to finance any
19 cash flow deficit of a city; or to purchase any obligations of a
20 city issued to finance cash flow deficits; or to pay the costs
21 of capital projects, but all provisions of outstanding bonds of
22 the authority and all rights and remedies of obligees of the
23 authority under this act shall be and shall remain valid and
24 enforceable.
25 Section 203. Powers and duties.
26 (a) General powers and duties.--The authority is established
27 for the purposes, without limitation, by itself or by agreement
28 in cooperation with others, of assisting cities in solving their
29 budgetary and financial problems and helping cities achieve and
30 maintain access to the capital markets.
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1 (b) Specific duties.--The authority shall have the powers
2 and its duties shall be:
3 (1) To assist cities in achieving financial stability in
4 any manner consistent with the purposes and powers described
5 by this act.
6 (2) To assist cities in avoiding defaults, eliminating
7 and financing deficits, maintaining sound budgetary practices
8 and avoiding the interruption of municipal services.
9 (3) To borrow money and issue bonds to assist cities.
10 (4) To negotiate intergovernmental cooperation
11 agreements with cities containing such terms and conditions
12 as will enable such cities to eliminate and avoid deficits,
13 maintain sound budgetary practices and avoid interruption of
14 municipal services.
15 (5) To make annual reports within 120 days of the close
16 of the authority's fiscal year, commencing with the fiscal
17 year ending June 30, 2001, to the Governor and the General
18 Assembly describing its progress with respect to restoring
19 the financial stability of assisted cities and achieving
20 balanced budgets for assisted cities, such reports to be
21 filed with the Governor, with the presiding officers of the
22 Senate and the House of Representatives, with the chairperson
23 and minority chairperson of the Appropriations Committee of
24 the Senate and the chairperson and the minority chairperson
25 of the Appropriations Committee of the House of
26 Representatives and with the governing body, mayor and
27 controller of the assisted city.
28 (6) To comply with the provisions of section 317
29 concerning the maximum amount of the first series of
30 authority bonds and the date of issuance thereof.
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1 (c) Specific powers.--In addition to the powers and duties
2 set forth elsewhere in this act, the authority shall have the
3 specific powers:
4 (1) To obtain copies of all reports regarding the
5 revenues, expenditures, budgets, costs, plans, operations,
6 estimates and any other financial or budgetary matters of an
7 assisted city or any corporate entity.
8 (2) To obtain additional reports on the above matters in
9 such form as are deemed necessary by the authority.
10 (3) To make factual findings concerning an assisted
11 city's budgetary and fiscal affairs.
12 (4) To make recommendations to an assisted city
13 concerning its budgetary and fiscal affairs.
14 (5) To make recommendations to the Governor and the
15 General Assembly regarding legislation or resolutions that
16 affect Commonwealth aid or mandates to an assisted city or
17 that concern an assisted city's taxing powers or relate to an
18 assisted city's fiscal stability.
19 (6) To provide financial assistance, including loans and
20 grants, to assist cities upon such terms and conditions as
21 may be approved by a qualified majority of the board or as
22 may be specified by the General Assembly to eliminate or
23 prevent deficits of a city.
24 (7) Subject to any limitations in agreements with
25 obligees of the authority, to enter into and amend as shall
26 be necessary from time to time intergovernmental cooperation
27 agreements with a city provided that such agreements and
28 amendments are approved by a qualified majority of the board.
29 (8) To exercise, while any bonds issued by the authority
30 to assist the city remain outstanding, powers of review
20000H2435B3279 - 21 -
1 concerning the budgetary and fiscal affairs of that city
2 consistent with this act and the city's home rule charter or
3 other optional plan of government.
4 (9) To receive revenues from any source, directly or by
5 assignment, pledge or otherwise.
6 (10) To sue and be sued, implead and be impleaded,
7 complain and defend in all courts.
8 (11) To adopt, use and alter at will a corporate seal.
9 (12) To make bylaws for the management and regulation of
10 its affairs and adopt rules, regulations and policies in
11 connection with the performance of its functions and duties
12 which, notwithstanding any other provision of law to the
13 contrary, shall not be subject to review pursuant to the act
14 of June 25, 1982 (P.L.633, No.181), known as the Regulatory
15 Review Act.
16 (13) To make and enter into contracts and other
17 instruments necessary or convenient for the conduct of its
18 business and the exercise of the powers of the authority.
19 (14) To appoint officers, agents, employees and servants
20 and to prescribe their duties and to fix their compensation
21 as set forth in section 202(g).
22 (15) To retain counsel and auditors to render such
23 professional services as the authority deems appropriate. The
24 authority shall not be considered either an executive agency
25 or an independent agency for the purpose of the act of
26 October 15, 1980 (P.L.950, No.164), known as the Commonwealth
27 Attorneys Act, but shall possess the same status for such
28 purpose as the Auditor General, State Treasurer and the
29 Pennsylvania Public Utility Commission; except that the
30 provisions of section 204(b) and (f) of the Commonwealth
20000H2435B3279 - 22 -
1 Attorneys Act shall not apply to the authority;
2 notwithstanding the provisions of section 221(1) of the act
3 of October 5, 1980 (P.L.693, No.142), known as the JARA
4 Continuation Act of 1980, the authority, through its legal
5 counsel, shall defend actions brought against the authority
6 or its members, officers, officials and employees when acting
7 within the scope of their official duties.
8 (16) To cooperate with any Federal agency or government
9 agency.
10 (17) To acquire, by gift or otherwise, purchase, hold,
11 receive, lease, sublease and use any franchise, license,
12 property, real, personal or mixed, tangible or intangible or
13 any interest therein. However, the authority shall be
14 absolutely limited in its power to acquire real property
15 under this act to real property that will be used only for
16 the office space in which the authority will conduct its
17 daily business.
18 (18) To sell, transfer, convey and dispose of any
19 property, real, personal or mixed, tangible or intangible or
20 any interest therein.
21 (19) To enter into contracts for group insurance and to
22 contribute to retirement plans for the benefit of its
23 employees and to enroll its employees in an existing
24 retirement system of a government agency.
25 (20) To accept, purchase or borrow equipment, supplies,
26 services or other things necessary or convenient to the work
27 of the authority from other government agencies, and all
28 government agencies are authorized to sell, lend or grant to
29 the authority such equipment, supplies, services or other
30 things necessary or convenient to the work of the authority.
20000H2435B3279 - 23 -
1 (21) To borrow money for the purpose of assisting a
2 city, or in anticipation of the receipt of income of the
3 authority or of an assisted city and to evidence the same;
4 make and issue bonds of the authority; secure the payment of
5 such bonds or any part thereof, by pledge of or security
6 interest in all or any of its revenues, receipts, accounts,
7 tangible personal property and contract rights; make such
8 agreements with the purchasers or holders of such bonds or
9 with other obligees of the authority in connection with any
10 bonds, whether issued or to be issued, as the authority shall
11 deem advisable, which agreements shall constitute contracts
12 with such holders or purchasers; obtain such credit
13 enhancement or liquidity facilities in connection with any
14 bonds as the authority shall determine to be advantageous;
15 and, in general, provide for the security for said bonds and
16 the rights of the holders thereof.
17 (22) To lend, grant or otherwise transfer or pledge for
18 the benefit of an assisted city such assets, including
19 proceeds of bonds, as the authority deems appropriate, to be
20 used by such a city as capital or operating funds as provided
21 in an intergovernmental cooperation agreement, to refinance
22 or secure debt of an assisted city or for other purposes
23 consistent with this act.
24 (23) To enter into agreements with an assisted city that
25 receives funds or other financial assistance from the
26 authority pursuant to which such city may pledge assets,
27 rights, revenues and receipts, including tax revenues, to
28 secure the repayment of such funds or assistance by such city
29 if such security is required by the authority.
30 (24) To invest any funds held by the authority as set
20000H2435B3279 - 24 -
1 forth in section 311(b).
2 (25) To receive and hold assets, moneys and funds from
3 any source, including, but not limited to, appropriations,
4 grants, gifts and such tax revenues as may be allocated or
5 directed to it by law for the purposes of securing authority
6 indebtedness and providing assistance to cities in accordance
7 with this act.
8 (26) To procure such insurance, guarantees and sureties
9 containing such coverages, including, without limitation,
10 contracts insuring or guaranteeing the timely payment in full
11 of principal, interest and premium, if any, on bonds of the
12 authority, or providing liquidity for purchase of bonds of
13 the authority, in such amounts, from such insurers, sureties,
14 guarantors or other parties as the authority may determine to
15 be necessary or desirable for its purposes.
16 (27) To pledge the credit of the authority in the manner
17 provided in section 304.
18 (28) To do all acts and things necessary or convenient
19 for the promotion of its purposes and the general welfare of
20 the authority and to carry out the powers granted to it by
21 this act or any other acts.
22 (d) Intergovernmental cooperation agreements.--The authority
23 shall have the power, and its duty shall be, to enter into and
24 to implement fully such intergovernmental cooperation agreements
25 with cities as are approved by a qualified majority of the
26 board. No bonds may be issued by the authority until an
27 intergovernmental cooperation agreement has been approved by a
28 qualified majority of the board, except that the authority, at
29 anytime during the first 45 days after the effective date of
30 this act, may enter into an interim financing arrangement in
20000H2435B3279 - 25 -
1 anticipation of the initial bond issue without an
2 intergovernmental cooperation agreement in effect. Such
3 agreements, including, but not limited to, the initial
4 agreements described in section 209(a), may include such
5 definitions and procedures as may be necessary to implement the
6 financial planning process set forth in sections 209 and 210.
7 Intergovernmental cooperation agreements as well as other
8 service agreements to provide assistance to a city shall not be
9 deemed to create debt of the city. Intergovernmental cooperation
10 agreements shall contain such terms and be negotiated in such
11 manner as the authority and an assisted city shall determine
12 consistent with this act and the Constitution of Pennsylvania.
13 (1) A city may enter into an intergovernmental
14 cooperation agreement in which it, consistent with this act,
15 covenants to cooperate or agree in the exercise of any
16 function, power or responsibility with, or delegate or
17 transfer any function, power or responsibility to, the
18 authority upon the adoption by the governing body of such
19 city of an ordinance authorizing and approving the
20 intergovernmental cooperation agreement.
21 (2) An ordinance that authorizes a city to enter into an
22 intergovernmental cooperation agreement with the authority
23 shall specify:
24 (i) The purpose and objectives of the agreement.
25 (ii) The conditions of the agreement.
26 (iii) The term of the agreement, including
27 provisions relating to its termination.
28 (3) Except for assistance provided through an interim
29 financing arrangement, as provided for in this subsection, or
30 assistance necessary to enable a city to pay principal of or
20000H2435B3279 - 26 -
1 interest on its outstanding bonds, or lease payments securing
2 bonds of other government agencies, as provided for in
3 section 209(a), no assistance shall be provided by the
4 authority to a city unless an intergovernmental cooperation
5 agreement is in effect.
6 (e) Limitation.--Notwithstanding any purpose or general or
7 specific power granted by this act or any other act, whether
8 express or implied:
9 (1) The authority shall have no power to pledge the
10 credit or taxing powers of the Commonwealth or any other
11 government agency, including an assisted city, except the
12 credit of the authority created by this act, nor shall any of
13 the bonds of the authority be deemed a debt or liability of
14 the Commonwealth or of any other government agency, including
15 a city.
16 (2) Neither the Commonwealth nor any government agency,
17 including a city, except the authority created by this act,
18 shall be liable for the payment of the principal, interest or
19 premium on any such bonds.
20 (3) Notwithstanding any provision of this or any other
21 law to the contrary or of any implication that may be drawn
22 therefrom, the Commonwealth and all other government
23 agencies, except the authority, but including an assisted
24 city unless otherwise agreed to by such city pursuant to this
25 act, shall have no legal or moral obligation for the payment
26 of any expenses or obligations of the authority, including,
27 but not limited to, bond principal and interest, the funding
28 or refunding of any reserves and any administrative or
29 operating expenses whatsoever, other than for the advance of
30 funds for initial operating expenses of the authority
20000H2435B3279 - 27 -
1 contained in section 701 to be repaid by the authority as set
2 forth in sections 206(c) and 701.
3 (4) Bonds of the authority shall contain a prominent
4 statement of the limitation set forth in this subsection and
5 shall further recite that obligees of the authority shall
6 have no recourse, either legal or moral, to the Commonwealth
7 or to any other government agency, including the city, for
8 payment of such bonds.
9 Section 204. Term of existence of authority.
10 The authority shall have continuing existence and succession
11 for a term not exceeding one year after all of its liabilities,
12 including, without limitation, its bonds, have been fully paid
13 and discharged. Upon the termination of the existence of the
14 authority, all of its rights and properties, including funds
15 remaining in the debt service reserve fund, shall be paid to the
16 Commonwealth to the extent the Commonwealth has contributed such
17 rights or property; otherwise, such rights or property shall
18 pass to and be vested in the assisted city.
19 Section 205. Fiscal year.
20 The fiscal year of the authority shall be the same as the
21 fiscal year of the Commonwealth.
22 Section 206. Annual budget of authority.
23 (a) Budget.--Before March 1 of each year, the authority
24 shall adopt a budget by a qualified majority of the board
25 setting forth in reasonable detail the projected expenses of
26 operation of the authority for the ensuing fiscal year
27 (exclusive of the amounts set forth in paragraphs (1), (2), (3)
28 and (4)), including, but not limited to, the salary and benefits
29 of the executive director and any other employees of the
30 authority, and the projected revenues of the authority to be
20000H2435B3279 - 28 -
1 derived from investment earnings and any other moneys of the
2 authority which are estimated to be available to pay the
3 operating expenses set forth in the budget. A copy of the
4 authority's budget shall be submitted to the Governor and to the
5 General Assembly. The authority or its designated
6 representatives may be afforded an opportunity to appear before
7 the Governor and the Appropriations Committee of the Senate and
8 the Appropriations Committee of the House of Representatives
9 regarding the authority's budget. The following information
10 shall be submitted with the authority's budget:
11 (1) the total amount of debt service to become due on
12 authority bonds for such ensuing fiscal year, including
13 payments of interest and principal, maturity value or sinking
14 fund payments;
15 (2) the amount, if any, due to any provider of any
16 credit or liquidity facility representing payments made by
17 such provider as provided in the applicable resolution or
18 trust indenture as a result of any previous failure of the
19 authority to make any payment provided for in the applicable
20 resolution or trust indenture, including any related
21 reasonable interest, fees or charges so provided;
22 (3) the amount, if any, required to restore the debt
23 service reserve fund to the level required under section 313
24 and the resolution of the authority establishing such fund;
25 and
26 (4) the amount, if any, required to be rebated to the
27 United States to provide for continued Federal tax exemption
28 for bonds of the authority.
29 (b) Limit on operating expenses.--Following the submission
30 of the authority's budget to the Governor and the General
20000H2435B3279 - 29 -
1 Assembly and any hearing held by an appropriations committee
2 under subsection (a), the General Assembly, by concurrent
3 resolution with presentment to the Governor, in accordance with
4 section 9 of Article III of the Constitution of Pennsylvania,
5 may limit the operating expenses of the authority. In that
6 event, it shall be unlawful for the authority to spend more for
7 operating expenses than the limit established for that fiscal
8 year by the concurrent resolution. If the General Assembly does
9 not adopt a concurrent resolution prior to May 30, the
10 authority's budget shall be deemed approved for that fiscal
11 year.
12 (c) Sources of payment of authority expenses.--Authority
13 operating expenses shall be budgeted and paid first from the
14 revenues derived from the investment income of the authority and
15 then from other moneys of the authority described in subsection
16 (a) or from a tax imposed pursuant to Chapter 6 as permitted in
17 subsection (a). The amount appropriated in section 701 shall be
18 repaid by the authority from such sources or from the proceeds
19 of the initial issue of bonds by the authority, and up to
20 $500,000 of initial authority operating expenses may be funded
21 with proceeds of the initial issue of bonds. The Commonwealth
22 shall not be responsible for funding the annual budget of the
23 authority.
24 (d) Examination of books.--The chairperson and minority
25 chairperson of the Appropriations Committee of the Senate and
26 the chairperson and minority chairperson of the Appropriations
27 Committee of the House of Representatives shall have the right
28 at any time to examine the books, accounts and records of the
29 authority.
30 Section 207. Annual report to be filed; annual audits.
20000H2435B3279 - 30 -
1 Every authority shall file an annual report with the
2 chairperson and the minority chairperson of the Appropriations
3 Committee of the Senate and chairperson and the minority
4 chairperson of the Appropriations Committee of the House of
5 Representatives, which shall make provisions for the accounting
6 of revenues and expenses. The authority shall have its books,
7 accounts and records audited annually in accordance with
8 generally accepted auditing standards by an independent auditor
9 who shall be a certified public accountant, and a copy of his
10 audit report shall be attached to and be made a part of the
11 authority's annual report. A concise financial statement shall
12 be published annually in the Pennsylvania Bulletin.
13 Section 208. Authority's financial assistance to cities.
14 (a) Loans.--Provided the authority has entered into an
15 intergovernmental cooperation agreement with a city and there is
16 an approved financial plan in effect, the authority may render
17 financial assistance to the city in the form of loans and grants
18 from authority funds, including proceeds from bonds, and the
19 city may borrow or receive such funds for any lawful purpose.
20 However, if the authority has not entered into an
21 intergovernmental cooperation agreement with a city or if there
22 is not an approved financial plan in effect, the authority shall
23 not render financial assistance to the city except for any
24 amounts necessary to enable such city to pay principal of or
25 interest on its outstanding bonds, or lease payments securing
26 bonds of other government agencies, as provided for in section
27 209(a). Loans and grants authorized by this section shall be
28 made on such terms and conditions as a qualified majority of the
29 board shall approve.
30 (b) City pledge.--A city may pledge any available source of
20000H2435B3279 - 31 -
1 revenue to secure payments due to the authority under any
2 agreement with the authority, including an intergovernmental
3 cooperation agreement. Any pledge of revenues made by a city for
4 these purposes, including, without limitation, a pledge of tax
5 revenues, shall be binding and enforceable upon such city and
6 its governing body for as long as any agreement secured by such
7 pledge remains outstanding. A city shall take no action during
8 the term of such agreement, or so long as bonds secured by
9 payments under such agreement are outstanding, that would
10 transfer for another purpose or reduce pledged revenues, or take
11 any other action which would impair the rights of the authority
12 or obligees of the authority.
13 (c) Additional city appropriations.--A city that receives a
14 loan or grant from the authority after such city has adopted its
15 operating budget may, at any time during the course of a fiscal
16 year, make additional appropriations to the extent of the
17 proceeds of such loan or grant received or to be received by
18 such city in such fiscal year.
19 Section 209. Financial plan of an assisted city.
20 (a) Requirement of a financial plan.--While any bonds issued
21 by the authority to assist a city remain outstanding, an
22 assisted city shall develop, implement and periodically revise a
23 financial plan as described in this section. The authority shall
24 not provide the net proceeds of the initial bond issue described
25 in section 317 and any subsequent bond issue, other than any
26 amounts necessary to enable such city to pay principal of or
27 interest on its outstanding bonds, or lease payments securing
28 bonds of other government agencies, which payments, in the
29 authority's discretion, may be made directly to the paying
30 agents for such bonds until the authority and the city have
20000H2435B3279 - 32 -
1 agreed upon such a plan.
2 (b) Elements of plan.--The financial plan shall include:
3 (1) Projected revenues and expenditures of the principal
4 operating fund or funds of the city for five fiscal years
5 consisting of the current fiscal year and the next four
6 fiscal years.
7 (2) Plan components that will:
8 (i) eliminate any projected deficit for the current
9 fiscal year and for subsequent fiscal years;
10 (ii) restore to special fund accounts money from
11 those accounts used for purposes other than those
12 specifically authorized;
13 (iii) balance the current fiscal year budget and
14 subsequent budgets in the financial plan through sound
15 budgetary practices, including, but not limited to,
16 reductions in expenditures, improvements in productivity,
17 increases in revenues or a combination of these steps;
18 (iv) provide procedures to avoid a fiscal emergency
19 condition in the future; and
20 (v) enhance the ability of the city to regain access
21 to the short-term and long-term credit markets.
22 (c) Standards for formulation of plan.--
23 (1) All projections of revenues and expenditures in a
24 financial plan shall be based on reasonable and appropriate
25 assumptions and methods of estimation, all such assumptions
26 and methods to be consistently applied.
27 (2) All revenue and appropriation estimates shall be on
28 a modified accrual basis in accordance with generally
29 accepted standards. Revenue estimates shall recognize
30 revenues in the accounting period in which they become both
20000H2435B3279 - 33 -
1 measurable and available. Estimates of city-generated
2 revenues shall be based on current or proposed tax rates,
3 historical collection patterns and generally recognized
4 econometric models. Estimates of revenues to be received from
5 the State government shall be based on historical patterns,
6 currently available levels or on levels proposed in a budget
7 by the Governor. Estimates of revenues to be received from
8 the Federal Government shall be based on historical patterns,
9 currently available levels or on levels proposed in a budget
10 by the President or in a congressional budget resolution.
11 Nontax revenues shall be based on current or proposed rates,
12 charges or fees, historical patterns and generally recognized
13 econometric models. Appropriation estimates shall include, at
14 a minimum, all obligations incurred during the fiscal year
15 and estimated to be payable during the fiscal year or in the
16 24-month period following the close of the current fiscal
17 year and all obligations of prior fiscal years not covered by
18 encumbered funds from prior fiscal years. Any deviations from
19 these standards of estimating revenues and appropriations
20 proposed to be used by a city shall be specifically disclosed
21 and shall be approved by a qualified majority of the board.
22 (3) All cash flow projections shall be based upon
23 reasonable and appropriate assumptions as to sources and uses
24 of cash, including, but not limited to, reasonable and
25 appropriate assumptions as to the timing of receipt and
26 expenditure thereof, and shall provide for operations of the
27 assisted city to be conducted within the resources so
28 projected. All estimates shall take due account of the past
29 and anticipated collection, expenditure and service demand
30 experience of the assisted city and of current and projected
20000H2435B3279 - 34 -
1 economic conditions.
2 (d) Form of plan.--Each financial plan shall, consistent
3 with the requirements of an assisted city's home rule charter or
4 optional plan of government:
5 (1) be in such form and shall contain:
6 (i) for each of the first two fiscal years covered
7 by the financial plan, such information as shall reflect
8 an assisted city's total expenditures by fund and by lump
9 sum amount for each board, commission, department or
10 office of an assisted city; and
11 (ii) for the remaining three fiscal years of the
12 financial plan, such information as shall reflect an
13 assisted city's total expenditures by fund and by lump
14 sum amount for major object classification;
15 (2) include projections of all revenues and expenditures
16 for five fiscal years, including, but not limited to,
17 projected capital expenditures and short-term and long-term
18 debt incurrence and cash flow forecasts by fund for the first
19 year of the financial plan;
20 (3) include a schedule of projected capital commitments
21 of the assisted city and proposed sources of funding for such
22 commitments; and
23 (4) be accompanied by a statement describing, in
24 reasonable detail, the significant assumptions and methods of
25 estimation used in arriving at the projections contained in
26 such plan.
27 (e) Annual submission of plan.--An assisted city shall
28 develop, and the authority shall review and act upon, an initial
29 five-year financial plan for the city as soon as practicable
30 after the effective date of this act. During each subsequent
20000H2435B3279 - 35 -
1 fiscal year while bonds of the authority are outstanding, the
2 mayor or chief executive officer of each assisted city shall, at
3 least 100 days prior to the beginning of its fiscal year or on
4 such other date as the authority may approve upon the request of
5 the assisted city, prepare and submit its proposed five-year
6 plan. At the same time the plan is submitted, the mayor or chief
7 executive officer shall also submit to the authority:
8 (1) the mayor's or chief executive officer's proposed
9 annual operating budget and capital budget which shall be
10 consistent with the first year of the financial plan and
11 which shall be prepared in accordance with the assisted
12 city's home rule charter or other optional plan of
13 government; and
14 (2) a statement by the mayor or chief executive officer
15 that such budget:
16 (i) is consistent with the financial plan;
17 (ii) contains funding adequate for debt service
18 payments, legally mandated services and lease payments
19 securing bonds of other government agencies; and
20 (iii) is based upon reasonable and appropriate
21 assumptions and methods of estimation.
22 (f) Authority review and approval of plan.--
23 (1) The authority shall promptly review each financial
24 plan, proposed operating budget and capital budget submitted
25 by the assisted city. In conducting such review, the
26 authority shall request from the city controller of the
27 assisted city an opinion or certification prepared in
28 accordance with generally accepted auditing standards, with
29 respect to the reasonableness of the assumptions and
30 estimates in the financial plan. The city controller and
20000H2435B3279 - 36 -
1 other elected officials shall comply with any such request
2 from the authority. Not more than 30 days after submission of
3 a financial plan and proposed operating budget, the authority
4 shall determine whether:
5 (i) the financial plan projects balanced budgets,
6 based upon reasonable assumptions as described in this
7 section, for each year of the plan; and
8 (ii) the proposed operating budget and capital
9 budget are consistent with the proposed financial plan.
10 If the authority determines that these criteria are
11 satisfied, the authority shall approve such financial plan by
12 a qualified majority vote.
13 (2) The authority shall not be bound by any opinions or
14 certifications of the city controller of the assisted city
15 issued pursuant to this subsection.
16 (3) If the authority fails to take any action within 30
17 days on a financial plan, the financial plan as submitted
18 shall be deemed approved. However, if during the 30 days a
19 written request by two members of the authority board for a
20 meeting and vote on the question of approval of the financial
21 plan has been submitted to the chairperson and a meeting and
22 vote does not take place, the financial plan shall be deemed
23 disapproved.
24 (g) Authority disapproval of plan.--
25 (1) If the authority disapproves the proposed financial
26 plan, the authority shall, when it notifies an assisted city
27 of its decision, state in writing in reasonable detail the
28 reasons for such disapproval, including the amount of any
29 estimated budget imbalance.
30 (2) The assisted city shall submit a revised financial
20000H2435B3279 - 37 -
1 plan to the authority within 15 days of such disapproval,
2 which revised plan eliminates the budget imbalance. Not more
3 than 15 days after the submission of such revised financial
4 plan, the authority shall determine whether the revised plan
5 satisfies the criteria set forth in subsection (f)(1). If the
6 authority determines that these criteria are satisfied, the
7 authority shall approve such financial plan by a qualified
8 majority vote. If the authority shall not so approve the
9 financial plan, then the authority shall, subject to the
10 occurrence of the events described in section 210(e), certify
11 the assisted city's noncompliance with the financial plan to
12 the Secretary of the Budget.
13 (h) Revisions to plan.--
14 (1) While any bonds of the authority remain outstanding,
15 the plan shall be revised on an annual basis to include the
16 operating budget for the next fiscal year and to extend the
17 plan for an additional fiscal year. In addition, the mayor or
18 chief executive officer of an assisted city shall, within 90
19 days of assuming office, propose revisions to the financial
20 plan or certify to the authority that he or she adopts the
21 existing plan. A city may, during the course of a fiscal
22 year, submit proposed revisions to the financial plan and
23 shall submit a proposed revision for any amendment to the
24 city's operating or capital budget.
25 (2) The authority shall review each proposed revision
26 within 20 days of its submission. The authority shall approve
27 the revision if it will not, based on reasonable assumptions,
28 cause the plan to become imbalanced. Proposed revisions shall
29 become part of the financial plan upon the approval of a
30 qualified majority of the authority board unless some other
20000H2435B3279 - 38 -
1 method of approval is permitted by authority rules and
2 regulations approved by a qualified majority or pursuant to
3 an agreement with the city contained in an intergovernmental
4 cooperation agreement. If the authority fails to take action
5 within 20 days on a proposed revision, such submission shall
6 be deemed approved unless a written request for a meeting and
7 vote has been made in accordance with subsection (f)(3) in
8 which event, if a meeting and vote does not take place, the
9 proposed revision shall be deemed disapproved.
10 (3) If the governing body of an assisted city adopts a
11 budget inconsistent with an approved financial plan, that
12 city shall submit the enacted budget to the authority as a
13 proposed revision to the plan. The authority shall review the
14 proposed revision within 30 days of its submission in
15 accordance with the criteria set forth in subsection (f) and
16 the approval process set forth in paragraph (2).
17 (i) Supplemental reports.--Within 45 days of the end of each
18 fiscal quarter, or monthly if a variation from the financial
19 plan has been determined in accordance with section 210(c), the
20 mayor or chief executive officer of an assisted city shall
21 provide the authority with reports describing actual or current
22 estimates of revenues and expenditures compared to budgeted
23 revenues and expenditures for such period reflected in its cash
24 flow forecast. Each report required under this section shall
25 indicate any variance between actual or current estimates and
26 budgeted revenues, expenditures and cash for the period covered
27 by such report. An assisted city shall also provide periodic
28 reports on debt service requirements in conformity with section
29 210(b).
30 (j) Effect of plan upon contracts and collective bargaining
20000H2435B3279 - 39 -
1 agreements.--
2 (1) A contract or collective bargaining agreement in
3 existence in an assisted city prior to the approval by the
4 authority of a financial plan submitted pursuant to this
5 section shall remain effective after approval of such plan
6 until such contract or agreement expires.
7 (2) After the approval by the authority of a financial
8 plan submitted pursuant to this section, an assisted city
9 shall execute contracts and collective bargaining agreements
10 in compliance with such plan. If a city executes a contract
11 or a collective bargaining agreement which is not in
12 compliance with the plan, the contract or agreement shall not
13 be void or voidable solely by reason of such noncompliance,
14 but the city shall submit to the authority a proposed
15 revision to the plan which demonstrates that revenues
16 sufficient to pay the costs of the contract or collective
17 bargaining agreement will be available in the affected fiscal
18 years of the plan.
19 (k) Effect of plan upon certain arbitration awards.--
20 (1) After the approval by the authority of a financial
21 plan submitted pursuant to this section, any determination of
22 a board of arbitration established pursuant to the provisions
23 of the act of June 24, 1968 (P.L.237, No.111), referred to as
24 the Policemen and Firemen Collective Bargaining Act,
25 providing for an increase in wages or fringe benefits of any
26 employee of an assisted city under the plan, in addition to
27 considering any standard or factor required to be considered
28 by applicable law, shall take into consideration and accord
29 substantial weight to:
30 (i) The approved financial plan.
20000H2435B3279 - 40 -
1 (ii) The financial ability of the assisted city to
2 pay the cost of such increase in wages or fringe benefits
3 without adversely affecting levels of service.
4 (2) Such determination shall be in writing, and a copy
5 thereof shall be forwarded to each party to the dispute and
6 the authority. Any determination of the board of arbitration
7 which provides for an increase in wages or fringe benefits of
8 any employee of an assisted city shall state with specificity
9 in writing all factors which the board of arbitration took
10 into account in considering and giving substantial weight to:
11 (i) the approved financial plan of the assisted
12 city; and
13 (ii) the assisted city's financial ability to pay
14 the cost of such increase.
15 (3) (i) Any party to a proceeding before a board of
16 arbitration may appeal to the court of common pleas to
17 review:
18 (A) the consideration of the assisted city's
19 financial plan;
20 (B) the determination as to the assisted city's
21 financial ability to pay; or
22 (C) the failure of the board of arbitration to
23 issue a determination, including a detailed writing
24 of all factors which the board of arbitration took
25 into account in considering and giving substantial
26 weight to the assisted city's financial ability to
27 pay and the assisted city's financial plan.
28 (ii) The decision of the board of arbitration shall
29 be vacated and remanded to the board of arbitration if
30 the court finds:
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1 (A) that the board of arbitration failed to take
2 into consideration and accord substantial weight to
3 the approved financial plan;
4 (B) that the board of arbitration's
5 determination as to the assisted city's financial
6 ability to pay is not supported by substantial
7 evidence as produced by the parties to the
8 proceedings before the board of arbitration; or
9 (C) that the board of arbitration has failed to
10 state with specificity in writing the factors which
11 it took into account in considering and giving
12 substantial weight to the assisted city's financial
13 ability to pay or the assisted city's approved
14 financial plan.
15 (iii) Such appeal shall be commenced not later than
16 30 days after the issuance of a final determination by
17 the board of arbitration.
18 (iv) If, after the exhaustion of all appeals, the
19 final arbitration award is not in compliance with the
20 approved financial plan, the award shall not be void or
21 voidable solely by reason of such noncompliance, but the
22 assisted city shall submit to the authority a proposed
23 revision to the plan which demonstrates that revenues
24 sufficient to pay the costs of the award will be
25 available in the affected fiscal years of the plan.
26 Section 210. Powers and duties of authority with respect to
27 financial plans.
28 (a) Formulation and approval of plan.--To enhance the
29 security of bonds issued by the authority, to minimize the need
30 for future borrowing by the authority and to advance the
20000H2435B3279 - 42 -
1 financial recovery of each assisted city, the authority shall
2 require such city to submit a five-year financial plan in
3 accordance with section 209. With regard to the formulation of
4 such plan, the authority shall:
5 (1) Consult with an assisted city as it prepares the
6 financial plan.
7 (2) Prescribe the form of the financial plan, insofar as
8 that form is consistent with an assisted city's home rule
9 charter or other optional plan of government and with this
10 act.
11 (3) Prescribe the supporting information required in
12 connection with such plan, such information to include at a
13 minimum:
14 (i) debt service payments due or projected to be due
15 during the relevant fiscal years;
16 (ii) payments for legally mandated services included
17 in the plan and due or projected to be due during the
18 relevant fiscal years; and
19 (iii) a statement in reasonable detail of the
20 significant assumptions and methods of estimation used in
21 arriving at the projections in the plan.
22 (4) Exercise any rights of approval or disapproval and
23 issue such recommendations as are authorized by this act in
24 accordance with the standards for formulation of the plan set
25 forth in section 209(c).
26 (b) Authority functions after plan is approved.--After a
27 financial plan has been approved, the authority shall:
28 (1) Receive and review:
29 (i) the financial reports submitted by the mayor or
30 chief executive officer of an assisted city under section
20000H2435B3279 - 43 -
1 209(i);
2 (ii) reports concerning the debt service
3 requirements on all bonds, notes of such city and lease
4 payments of such city securing bonds or other government
5 agencies for the following quarter, which reports shall
6 be in such form and contain such information as the
7 authority shall determine, and which shall be issued no
8 later than 60 days prior to the beginning of the quarter
9 to which they pertain, and shall be updated immediately
10 upon each issuance of bonds or notes, by the assisted
11 city or execution of a lease securing bonds of another
12 government agency, after the date of such report to
13 reflect any change in debt service requirements as a
14 result of such issuance; and
15 (iii) any additional information provided by the
16 assisted city concerning changed conditions or unexpected
17 events which may affect the city's adherence to the
18 financial plan. The reports described in subparagraph
19 (ii) shall be certified by the city controller.
20 (2) Determine, on the basis of information and reports
21 described in paragraph (1), whether an assisted city has
22 adhered to the financial plan.
23 (c) Variation from the plan.--If the authority determines,
24 based upon reports submitted by an assisted city under
25 subsection (b) or independent audits, examinations or studies of
26 the assisted city's finances obtained under subsection (i)(4),
27 that an assisted city's actual revenues and expenditures vary
28 from those estimated in the financial plan, the authority shall
29 require the city to provide such additional information as the
30 authority deems necessary to explain the variation. The
20000H2435B3279 - 44 -
1 authority shall take no action with respect to an assisted city
2 for departures from the financial plan in a fiscal quarter if:
3 (1) the city provides a written explanation for the
4 variation that the authority deems reasonable;
5 (2) the city proposes remedial action which the
6 authority believes will restore the city's overall compliance
7 with the financial plan;
8 (3) information provided by the city in the immediately
9 succeeding quarterly financial report demonstrates that the
10 city is taking such remedial action and otherwise complying
11 with the plan; and
12 (4) the city submits monthly supplemental reports in
13 accordance with section 209(i) until it regains compliance
14 with the financial plan.
15 (d) Authority may make recommendations.--The authority may
16 at any time issue recommendations as to how an assisted city may
17 achieve compliance with the financial plan and shall provide
18 copies of such recommendations to the mayor or chief executive
19 officer and the governing body of the city and to the officials
20 named in section 203(b)(5).
21 (e) When Commonwealth shall withhold funds.--
22 (1) The authority shall certify to the Secretary of the
23 Budget an assisted city's noncompliance with the financial
24 plan during any period when the authority has determined by
25 the vote of a qualified majority that the city has not
26 adhered to the plan and has not taken acceptable remedial
27 action during the next quarter following such departure from
28 the plan.
29 (2) The authority shall certify to the Secretary of the
30 Budget that an assisted city is not in compliance with the
20000H2435B3279 - 45 -
1 plan if the city:
2 (i) has no financial plan approved by the authority,
3 or has failed to file a financial plan with the
4 authority; or
5 (ii) has failed to file mandatory revisions to the
6 plan or reports as required by section 209(h), (i), (j)
7 or (k); and
8 (iii) has not been compelled to file a financial
9 plan, a mandatory revision to the plan or a report
10 through a mandamus action authorized under subsection
11 (j).
12 (3) If the authority certifies that an assisted city is
13 not in compliance with the financial plan under paragraph (1)
14 or (2), the Secretary of the Budget shall notify the city
15 that such certification has been made and that each grant,
16 loan, entitlement or payment to the assisted city by the
17 Commonwealth, or any of its agencies, including payment from
18 the city account established pursuant to section 314, shall
19 be suspended pending compliance with the financial plan.
20 Funds withheld shall be held in escrow by the Commonwealth
21 or, in the case of the city account, be retained in that city
22 account until compliance with the plan is restored as set
23 forth in paragraph (4). Funds held in escrow pursuant to this
24 subsection shall not lapse pursuant to section 621 of the act
25 of April 9, 1929 (P.L.177, No.175), known as The
26 Administrative Code of 1929, or any other law.
27 (4) The authority shall, by qualified majority vote,
28 determine when the conditions which caused an assisted city
29 to be certified as not in compliance with the financial plan
30 have ceased to exist and shall promptly notify the Secretary
20000H2435B3279 - 46 -
1 of the Budget of such vote. The Secretary of the Budget shall
2 thereupon release all funds held in escrow, together with all
3 interest and income earned thereon during the period held in
4 escrow, and the disbursements of amounts in the city account
5 shall resume as provided in section 314(c).
6 (f) Exemptions.--Notwithstanding the provisions of
7 subsection (e), the following shall not be withheld from an
8 assisted city:
9 (1) funds for capital projects under contract in
10 progress;
11 (2) funds granted or allocated to an assisted city
12 directly from an agency of the Commonwealth or from the
13 Federal Government for distribution by the Commonwealth after
14 the declaration of a disaster resulting from a catastrophe;
15 (3) pension fund payments required by law;
16 (4) funds administered by the assisted city's department
17 of human services or department of health that provide
18 benefits or service to recipients;
19 (5) funds that the assisted city has pledged to repay
20 revenue bonds or notes issued; and
21 (6) funds appropriated by the Commonwealth for the court
22 system or correctional programs of the assisted city.
23 (g) Effect of Commonwealth's failure to disburse funds.--The
24 provisions of subsection (e) also shall not apply and an
25 assisted city shall not be found to have departed from the
26 financial plan due to the Commonwealth's failure to pay any
27 money, including payment of Federal funds distributed by or
28 through the Commonwealth, due to the city from moneys
29 appropriated by the General Assembly.
30 (h) Assisted city to determine expenditure of available
20000H2435B3279 - 47 -
1 funds.--Nothing in this act shall be construed to limit the
2 power of an assisted city to determine, from time to time,
3 within available funds of the assisted city, the purposes for
4 which expenditures are to be made by the assisted city and the
5 amounts of such expenditures then permitted under the financial
6 plan of the assisted city.
7 (i) Documents and examinations to be reviewed or undertaken
8 by the authority.--The authority shall:
9 (1) receive from an assisted city, and review, the
10 reports, documents, budgetary and financial planning data and
11 other information prepared by or on behalf of such assisted
12 city and which are to be made available to the authority
13 under this act;
14 (2) receive from a corporate entity or school district,
15 and review, the reports, documents, budgetary and financial
16 planning data and other information prepared by or on behalf
17 of a corporate entity or school district and which are to be
18 made available to the authority under this act as the
19 authority deems necessary to accomplish the purposes of this
20 act;
21 (3) inspect and copy such books, records and information
22 of an assisted city, corporate entity or school district as
23 the authority deems necessary to accomplish the purposes of
24 this act; and
25 (4) conduct or cause to be conducted such independent
26 audits, examinations or studies of a school district or
27 assisted city's finances as the authority deems appropriate.
28 (5) conduct or cause to be conducted such independent
29 audits, examinations or studies of a corporate entity's
30 finances as the authority by a qualified majority of the
20000H2435B3279 - 48 -
1 board deems appropriate.
2 (j) Remedies of authority for failure of an assisted city to
3 file financial plans and reports.--In the event that an assisted
4 city shall fail to file with the authority any financial plan,
5 revision to a financial plan, report or other information
6 required to be filed with the authority pursuant to this act,
7 the authority, in addition to all other rights which the
8 authority may have at law or in equity, shall have the right by
9 mandamus to compel the assisted city and the officers, employees
10 and agents thereof to file with the authority the financial
11 plan, revision to a financial plan, report or other information
12 which the assisted city has failed to file. The authority shall
13 give the assisted city written notice of the failure of the
14 assisted city to file and of the authority's intention to
15 initiate an action under this subsection and shall not initiate
16 such an action earlier than ten days after the giving of such
17 notice.
18 Section 211. Limitation on authority and on assisted cities to
19 file petition for relief under Federal bankruptcy
20 law.
21 (a) Limitation on bankruptcy filing.--Notwithstanding any
22 other provision of law, so long as the authority shall have
23 outstanding any bonds issued pursuant to this act, the authority
24 and any assisted city shall not be authorized to file a petition
25 for relief under 11 U.S.C. Ch. 9 (relating to bankruptcy) or any
26 successor Federal bankruptcy law, and no government agency shall
27 authorize the authority or such city to become a debtor under 11
28 U.S.C. Ch. 9 or any successor Federal bankruptcy law.
29 (b) Bankruptcy filing approval.--In addition to the
30 limitation set forth in subsection (a), and notwithstanding any
20000H2435B3279 - 49 -
1 other provision of law, no city of the second class shall be
2 authorized to file a petition for relief under 11 U.S.C. Ch. 9
3 or any successor Federal bankruptcy law unless such petition has
4 first been submitted to and the filing thereof has been first
5 approved in writing by the Governor. The Governor is hereby
6 designated, in accordance with 11 U.S.C. § 109(c)(2) (relating
7 to the debtor status of a municipality), as the organization of
8 the Commonwealth which shall have power to approve or disapprove
9 the filing of any such petition of a political subdivision and
10 to approve or disapprove any plan of readjustment of the debts
11 of any such political subdivision prepared, filed and submitted
12 with the petition to the court, as provided under 11 U.S.C. Ch.
13 9.
14 (c) Review of bankruptcy petition.--
15 (1) When any such petition shall be submitted to the
16 Governor for approval, accompanied with a proposed plan of
17 readjustment of the debts of a city, the Governor shall make
18 a careful and thorough investigation of the financial
19 condition of such city, of its assets and liabilities, of its
20 sinking fund and whether the affairs thereof are managed in a
21 careful, prudent and economic manner in order to ascertain
22 whether the presentation of such petition is justified or
23 represents an unjust attempt by such city to evade payment of
24 some of its contractual obligations, and, if the Governor
25 believes that such petition should be approved, whether the
26 plan of readjustment submitted will be helpful to the
27 financial condition of the city and is feasible, and, at the
28 same time, fair and equitable to all creditors.
29 (2) The Governor shall also, prior to giving his
30 approval, ascertain the amount, if any, of the obligations of
20000H2435B3279 - 50 -
1 any such petitioning city which is held by any agency or
2 agencies of the State government as trust funds and shall,
3 before approving any such petition and plan of readjustment,
4 consult with and give every such agency an opportunity to be
5 heard and the privilege to examine the findings of the
6 Governor resulting from the investigation hereinbefore
7 required to be made and shall likewise hear any other
8 creditor of such city, whether resident in or outside of this
9 Commonwealth, who shall apply therefor.
10 (3) The Governor, if he approves a petition, shall,
11 before giving his approval, require such modification in the
12 proposed plan for readjusting the debts as to him appears
13 proper.
14 (d) Effective date.--Subsections (b) and (c) shall take
15 effect on the effective date of this act and shall apply to an
16 assisted city whenever the authority does not have any
17 outstanding bonds issued pursuant to this act.
18 Section 212. Sovereign immunity.
19 Members of the board shall not be liable personally on any
20 obligations of the authority, including, without limitation,
21 bonds of the authority. It is hereby declared to be the intent
22 of the General Assembly that the authority created by this act
23 and its members, officers, officials and employees shall enjoy
24 sovereign and official immunity, as provided in 1 Pa.C.S. § 2310
25 (relating to sovereign immunity reaffirmed; specific waiver),
26 and shall remain immune from suit except as provided by and
27 subject to the provisions of 42 Pa.C.S. §§ 8501 (relating to
28 definitions) through 8528 (relating to limitations on damages).
29 CHAPTER 3
30 BONDS AND FUNDS OF AUTHORITY
20000H2435B3279 - 51 -
1 Section 301. Bonds.
2 (a) Authorization.--The bonds of the authority shall be
3 authorized by resolution of the board by vote of a qualified
4 majority and shall be of such series, bear such date or dates,
5 bear or accrue interest at such rate or rates as shall be
6 determined by the board as necessary to issue and sell the
7 authorized bonds, be in such denominations, be in such form,
8 either coupon or fully registered without coupons or in
9 certificated or book-entry-only form, carry such registration,
10 exchangeability and interchangeability privileges, be payable in
11 such medium of payment and at such place or places, be subject
12 to such terms of redemption and be entitled to such priorities
13 of payment in the revenues or receipts of the authority as such
14 resolution or resolutions of the board may provide. The bonds
15 shall be signed by or shall bear the facsimile signatures of
16 such officers as the board shall determine, and coupon bonds
17 shall have attached thereto interest coupons bearing the
18 facsimile signature of the treasurer of the authority, and all
19 bonds shall be authenticated by an authenticating agent, fiscal
20 agent or trustee, all as may be prescribed in such resolution or
21 resolutions. Any such bonds may be issued and delivered
22 notwithstanding that one or more of the officers signing such
23 bonds or the treasurer whose facsimile signature shall be upon
24 the coupon, or any thereof, shall have ceased to be such officer
25 or officers at the time when such bonds shall actually be
26 delivered.
27 (b) Maturity date.--
28 (1) Bonds issued to finance a deficit other than a cash
29 flow deficit or to provide other financial assistance to an
30 assisted city shall mature at such time or times not
20000H2435B3279 - 52 -
1 exceeding ten years from their respective dates of original
2 issue as the authority shall by resolution determine.
3 (2) Bonds issued to finance the costs of capital
4 projects shall mature at such time or times not exceeding the
5 weighted average useful life of the projects being financed
6 and in no event exceeding 30 years from their respective
7 dates of original issue as the authority shall by resolution
8 determine.
9 (3) Bonds issued in anticipation of income of the
10 authority or to finance a cash flow deficit of a city shall
11 mature within the fiscal year of the date of issuance
12 thereof, except for bonds issued in anticipation of grants
13 from the Commonwealth, a government agency or Federal agency,
14 which bonds shall mature no later than the time of
15 anticipated receipt of such grant.
16 (4) Bonds issued to purchase obligations of a city shall
17 mature not more than 30 days after the maturity of the
18 obligations purchased.
19 (c) Sale.--Bonds may be sold at public sale or invited sale
20 for such price or prices and at such rate or rates of interest
21 as the authority shall determine. Bonds may be sold at private
22 sale by negotiation at such price or prices and at such rate or
23 rates of interest as the authority shall determine but only if
24 the authority makes a written public explanation of the
25 circumstances and justification for the private sale by
26 negotiation. Pending the preparation of the definitive bonds,
27 interim receipts may be issued to the purchaser or purchasers of
28 such bonds and may contain such terms and conditions as the
29 authority may determine.
30 (d) Negotiable instruments.--Bonds of an authority shall
20000H2435B3279 - 53 -
1 have the qualities of negotiable instruments under 13 Pa.C.S.
2 (relating to commercial code).
3 (e) Use of proceeds.--The proceeds of an issue of bonds may
4 be used to pay the costs of issuance of such bonds, to pay costs
5 of administration of authority assistance to a city, to fund
6 reserves for such bonds, to capitalize interest on such bonds
7 for a period not to exceed 12 months, to fund an existing or
8 projected deficit of a city or to provide for other financial
9 assistance to a city, to finance any cash flow deficit of a city
10 or of the authority or to purchase any obligations of a city
11 issued to finance cash flow deficits or to pay the costs of
12 capital projects, provided that the authority shall not issue
13 bonds to finance the costs of a capital project in and for an
14 assisted city unless it receives the request described in
15 subsection (g) accompanied by a certification that the assisted
16 city cannot obtain financing for such capital projects at
17 reasonable rates except through the issuance of authority bonds
18 and that the construction or acquisition of such capital
19 projects is a material element of such city's approved financial
20 plan and the authority determines by a qualified majority of the
21 board that the capital project is:
22 (1) an emergency capital project which must necessarily
23 be undertaken as a direct result of an order by a court of
24 competent jurisdiction or for the repair or replacement of an
25 existing facility that had been placed in service prior to
26 the effective date of this act and is owned or occupied by a
27 city on the effective date of this act; or
28 (2) a capital project necessary to achieve savings and
29 balanced budgets under an approved financial plan.
30 In addition to the requirement of a qualified majority of the
20000H2435B3279 - 54 -
1 board, the Governor and either the Auditor General or State
2 Treasurer shall certify that a capital project under paragraph
3 (2) is a capital project necessary to achieve savings and
4 balanced budgets under an approved financial plan of an assisted
5 city. Proceeds of the initial bond issue of the authority may be
6 applied to reimburse the Commonwealth for the advance set forth
7 in section 701 and to fund up to $500,000 of initial operating
8 expenses of the authority.
9 (f) Refunding.--Subject to the provisions of the outstanding
10 bonds, notes or other obligations issued under this or other
11 acts and subject to the provisions of this act, the authority
12 shall have the right and power to refund any outstanding debt of
13 the authority or a city, whether such debt represents principal
14 or interest, in whole or in part, at any time. The term "refund"
15 and its variations shall mean the issuance and sale of
16 obligations the proceeds of which are used, or are to be used,
17 for the payment or redemption of outstanding obligations upon or
18 prior to maturity. The term of any bonds issued for refunding
19 purposes shall not extend to a maturity date which could not
20 have been included in the original issue of bonds being
21 refunded.
22 (g) City request prerequisite.--The authority shall not
23 issue any bonds except bonds to refund its bonds unless it has
24 received a request from a city for such issuance executed by the
25 mayor or chief executive officer of such city and approved by
26 the governing body of such city by resolution.
27 Section 302. Exemption from taxation.
28 The effectuation of the authorized purposes of the authority
29 shall and will be in all respects for the benefit of the people
30 of this Commonwealth, for the increase of their commerce and
20000H2435B3279 - 55 -
1 prosperity and for the improvements of their health, safety,
2 welfare and living conditions; and, since the authority will, as
3 a public instrumentality of the Commonwealth, be performing
4 essential governmental functions in effectuating such purposes,
5 the authority shall not be required to pay any taxes or
6 assessments upon any property acquired or used or permitted to
7 be used by the authority for such purposes; and the bonds issued
8 by the authority, their transfer and the income therefrom,
9 including any profits made on the sale thereof, shall, at all
10 times, be free from State and local taxation within this
11 Commonwealth. This exemption shall not extend to gift, estate,
12 succession or inheritance taxes or any other taxes not levied
13 directly on the bonds, the transfer thereof, the income
14 therefrom or the realization of profits on the sale thereof.
15 Section 303. Validity of bonds; limitation on actions.
16 (a) Presumption.--Any bond reciting in substance that it has
17 been issued by the authority to accomplish the public purposes
18 of this act shall be conclusively deemed in any suit, action or
19 proceeding involving the validity or enforceability of such
20 bonds or security therefor to have been issued for such
21 purposes.
22 (b) Filing.--The authority may cause a copy of any
23 resolution authorizing the issuance of bonds adopted by it to be
24 filed for public inspection in its office and in the office of
25 the clerk of the governing body of the city to be assisted and
26 may thereupon cause to be published in a newspaper of general
27 circulation published or circulating in the city a notice
28 stating:
29 (1) The fact and date of such adoption.
30 (2) The places where such resolution has been so filed
20000H2435B3279 - 56 -
1 for public inspection.
2 (3) The date of publication of such notice.
3 (4) That any action or proceeding of any kind or nature
4 in any court questioning the validity or proper authorization
5 of bonds provided for by the resolution, or the validity of
6 any covenants, agreements or contract provided for by such
7 resolution, shall be commenced within 10 days after the
8 publication of such notice.
9 If any such notice shall at any time be published and if no
10 action or proceeding questioning the validity or proper
11 authorization of bonds provided for by the resolution referred
12 to in such notice, or the validity of any covenants, agreements
13 or contract provided by such resolution, shall be commenced
14 within 10 days after the publication of such notice, then all
15 residents, taxpayers and owners of property in the city and all
16 other persons whatsoever shall be forever barred and foreclosed
17 from instituting or commencing any action or proceeding in any
18 court, or pleading any defense to any action or proceedings,
19 questioning the validity or proper authorization of such bonds,
20 or the validity of any such covenants, agreements or contracts,
21 and said bonds, covenants, agreements and contracts shall be
22 conclusively deemed to be valid and binding obligations in
23 accordance with their terms and tenor.
24 (c) Estoppel.--After issuance of bonds, all such bonds shall
25 be conclusively presumed to be fully authorized and issued by
26 all the laws of this Commonwealth, and any person shall be
27 estopped from questioning their sale, execution or delivery by
28 the authority.
29 Section 304. Provisions of bonds; trust indentures.
30 In connection with the issuance of bonds and in order to
20000H2435B3279 - 57 -
1 secure the payment of such bonds, the authority, in addition to
2 its other powers, shall have the power to:
3 (1) pledge or grant a security interest in all or any
4 part of its gross or net revenues, including the proceeds of
5 any tax levied for the purposes of or made available for use
6 by the authority, to which its right then exists or which may
7 thereafter come into existence;
8 (2) grant a security interest in all or any part of its
9 personal property then owned or thereafter acquired;
10 (3) covenant against pledging or granting a security
11 interest in all or any part of its revenues or all or any
12 part of its personal property to which its right or title
13 exists or may thereafter come into existence, or against
14 permitting or suffering any lien on such revenues or
15 property; covenant with respect to limitations on its right
16 to sell, lease or otherwise dispose of any of its real
17 property; and covenant as to which other or additional debts
18 or obligations may be incurred by it;
19 (4) covenant as to the bonds to be issued and as to the
20 issuance of such bonds, in escrow or otherwise, and as to the
21 use and disposition of the proceeds thereof; provide for the
22 replacement of lost, destroyed or mutilated bonds; covenant
23 against extending the time for the payment of bonds or
24 interest thereon; redeem the bonds, and covenant for their
25 redemption and provide the terms and conditions thereof;
26 (5) covenant as to the amount of revenues to be received
27 in each fiscal year or other period of time by the authority,
28 as well as to the use and disposition to be made thereof,
29 create or authorize the creation of special funds or reserves
30 for debt service or other purposes and covenant as to the use
20000H2435B3279 - 58 -
1 and disposition of the moneys held in such funds;
2 (6) prescribe the procedure, if any, by which the terms
3 of any contract with bondholders may be amended or abrogated,
4 and the amount of bonds the holders of which must consent
5 thereto, and the manner in which such consent may be given;
6 (7) covenant as to the use of any or all of its real or
7 personal property, to warrant its title, and covenant as to
8 the maintenance of its real and personal property, the
9 replacement thereof, the insurance to be carried thereon and
10 the use and disposition of insurance proceeds;
11 (8) covenant as to the rights, liabilities, powers and
12 duties arising upon the breach by it of any covenant,
13 condition or obligation, provided that the authority shall
14 not be permitted to covenant that upon such breach any or all
15 of its bonds shall become or may be declared due before
16 stated maturity;
17 (9) vest in a trustee or the holders of bonds, or any
18 proportion of them, the right to enforce the payment of the
19 bonds or any covenants securing or relating to the bonds;
20 vest in a trustee the right, in the event of default in
21 payments of interest or on principal of bonds by the
22 authority, to take possession and use, operate and manage any
23 real or personal property and to collect the revenues and
24 receipts of an authority and to dispose of such moneys in
25 accordance with the agreement of the authority with the
26 trustee; provide for the powers and duties of a trustee and
27 to limit liabilities thereof; and provide the terms and
28 conditions upon which a trustee or the holders of bonds, or
29 any proportion of them, may enforce any covenant or rights
30 securing or relating to the bonds;
20000H2435B3279 - 59 -
1 (10) enter into interest rate exchange agreements,
2 interest rate cap and floor agreements and other similar
3 agreements which in the judgment of the authority will assist
4 the authority in managing the interest costs of the
5 authority;
6 (11) obtain letters of credit, bonds insurance and other
7 facilities for credit enhancement and liquidity; and
8 (12) exercise all or any part or combination of the
9 powers granted in this act, make covenants other than and in
10 addition to the covenants expressly authorized by this act,
11 make such covenants and do any and all such acts and things
12 as may be necessary or convenient or desirable in order to
13 secure its bonds or, in the absolute discretion of the
14 authority, as will tend to accomplish the purposes of this
15 act, by making the bonds more marketable notwithstanding that
16 such covenants, acts or things may not be specifically
17 enumerated by this act.
18 Notwithstanding any provision of this act to the contrary, the
19 real property of the authority shall not be mortgaged and shall
20 not be subject to attachment nor levied upon by execution or
21 otherwise. The revenues of the authority and the personal
22 property of the authority shall be pledged or otherwise
23 encumbered only as expressly provided in this section and,
24 except to the extent necessary to effectuate such pledge or
25 encumbrance, shall not be subject to attachment nor levied upon
26 by execution or otherwise.
27 Section 305. Remedies of obligee of authority.
28 An obligee of the authority shall have the right, in addition
29 to all other rights which may be conferred on such obligees
30 subject only to any contractual restrictions binding upon such
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1 obligee:
2 (1) By mandamus, suit, action or proceeding at law or in
3 equity, to compel the authority and the members of its
4 governing board, officers, agents or employees thereof to
5 perform each and every term, provision and covenant contained
6 in any bond or contract of the authority with or for the
7 benefit of such obligee and to require the carrying out of
8 any or all such covenants and agreements of the authority and
9 the fulfillment of all duties imposed upon the authority by
10 this act.
11 (2) By proceeding in equity, to obtain an injunction
12 against any acts or things which may be unlawful or the
13 violation of any of the rights of such obligee of the
14 authority.
15 (3) To require the authority to account as if it were
16 the trustee of an express trust for the obligees of the
17 authority for any pledged revenues received.
18 Section 306. Validity of pledge.
19 Any pledge of or grant of a security interest in revenues of
20 the authority or personal property of an authority made by the
21 authority shall be valid and binding from the time when the
22 pledge is made; the revenues or other property so pledged and
23 thereafter received by the authority shall immediately be
24 subject to the lien of any such pledge or security interest
25 without any physical delivery thereof or further act, and the
26 lien of any such pledge or security interest shall be valid and
27 binding as against all parties having claims of any kind in
28 tort, contract or otherwise against the authority irrespective
29 of whether such parties have notice thereof. Neither the
30 resolution nor any other instrument of the authority by which a
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1 pledge or security interest is created need be recorded or filed
2 to perfect such pledge or security interest.
3 Section 307. Commonwealth pledges.
4 (a) Bondholders.--The Commonwealth does hereby pledge to and
5 agree with each and every obligee of the authority that the
6 Commonwealth will not limit or alter the rights hereby vested in
7 the authority in any manner inconsistent with the obligations of
8 the authority to such obligees until all bonds at any time
9 issued, together with the interest thereon, are fully paid and
10 discharged. The Commonwealth does further pledge to and agree
11 with any Federal agency that, in the event that any Federal
12 agency shall contribute any funds to the authority for
13 assistance to a city pursuant to this act, the Commonwealth will
14 not alter or limit the rights and powers of the authority in any
15 manner which would be inconsistent with the due performance of
16 any agreements between the authority, the city and any such
17 Federal agency.
18 (b) Lessees.--The Commonwealth does hereby pledge to and
19 agree with any person who, as owner thereof, leases or subleases
20 property to or from the authority, that the Commonwealth will
21 not limit or alter the rights and powers hereby vested in the
22 authority or otherwise created by this act in any manner which
23 impairs the obligations of the authority until all such
24 obligations of the authority under such lease or sublease are
25 fully met and discharged.
26 (c) Reduction of pledged tax revenues.--If and to the extent
27 that the authority pledges any proceeds of a tax authorized by
28 law to be levied for the authority purposes or made available
29 for use by the authority as security for bonds of the authority,
30 or the city pledges any proceeds of a tax as security for
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1 payment by such city to the authority, the Commonwealth does
2 hereby pledge to and agree with each and every obligee of the
3 authority acquiring bonds so secured to be issued by the
4 authority that the Commonwealth itself will not, nor will it
5 authorize any government agency levying such tax to, reduce the
6 rate of tax imposed for such authority or city purposes, or made
7 available for use by the authority, until all bonds so secured
8 by the pledge of the authority, together with the interest
9 thereon, are fully paid or provided for or until all payments to
10 the authority so secured by the pledge of the city have been
11 made or provided for.
12 Section 308. Resolution and law are contracts with holders of
13 bonds.
14 Except as otherwise provided in any resolution of the
15 authority authorizing or awarding bonds, the terms of such
16 resolution and any agreement authorized by such resolution and
17 the terms of this act as in effect when such bonds were
18 authorized shall constitute a contract between the authority and
19 the obligees from time to time of the authority, subject to
20 modification by the vote by holders of such percentage of bonds
21 as the resolution authorizing or awarding such bonds shall
22 provide.
23 Section 309. Bonds to be legal investments.
24 Bonds issued pursuant to this act are hereby made securities
25 in which all government agencies, all insurance companies, trust
26 companies, banking associations, banking corporations, savings
27 banks, investment companies, executors, the trustees of any
28 retirement, pension or annuity fund or system of the
29 Commonwealth or of a city, trustees and other fiduciaries may
30 properly and legally invest funds, including capital, deposits
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1 or other funds in their control or belonging to them. Such bonds
2 are hereby made securities which may properly and legally be
3 deposited with and received by any government agency for any
4 purpose for which the deposit of bonds or other obligations of
5 the Commonwealth now or may hereafter be authorized by law.
6 Section 310. Right to enforcement of pledge of revenues.
7 The obligees of the authority shall have the right to enforce
8 a pledge of or security interest in revenues of the authority
9 securing payment of bonds of the authority against all
10 government agencies in possession of any such revenues at any
11 time, which revenues may be collected directly from such
12 officials upon notice by such obligees or a trustee for such
13 obligees for application to the payment of such bonds as and
14 when due or for deposits in any sinking, bond or debt service
15 fund established by this act or established by resolution of the
16 authority with such trustee at the times and in the amounts
17 specified in such bonds or the resolution or indenture or trust
18 agreement securing such bonds. Any government agency in
19 possession of any such revenues shall make payment against
20 receipt and shall thereby be discharged from any further
21 liability or responsibility for such revenues. If such payment
22 shall be to a holder of bonds, it shall be made against
23 surrender of such bonds to the payor for delivery to the
24 authority in the case of payment in full; otherwise, it shall be
25 made against production of such bonds for notation thereon of
26 the amount of the payment. The provisions of this section with
27 respect to the enforceability and collection of revenues which
28 secure bonds shall supersede any contrary or inconsistent
29 statutory provision or rule of law. This section shall be
30 construed and applied to fulfill the legislative purpose of
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1 clarifying and facilitating the financing of the authority of
2 the costs of assisting a city by assuring to the obligees of the
3 authority the full and immediate benefit of the security for the
4 bonds without delay, diminution or interference based on any
5 statute, decision, ordinance or administrative rule or practice.
6 Section 311. Funds of authority; sources of revenue.
7 (a) Receipt by treasurer.--All funds of the authority
8 received from any source shall be delivered to or upon the order
9 of the treasurer of the authority or to such other agent of the
10 authority as the board may designate. Such funds received by the
11 authority shall be promptly deposited in a bank or banks in this
12 Commonwealth as chosen by a qualified majority of the board. The
13 moneys in such account or accounts may be paid by the treasurer
14 of the authority or other designated agent of the authority on
15 warrant of the treasurer of the authority or by such persons as
16 the board may authorize to make such warrants. All such deposits
17 of moneys may, if required by the authority, be secured by
18 obligations of the United States or of the Commonwealth of a
19 market value equal at all times to the amount of the deposit,
20 and all banks and trust companies are authorized to give such
21 security for such deposits, provided that no moneys deposited in
22 a debt service reserve fund may be secured by a deposit of
23 obligations issued by or obligations guaranteed by an assisted
24 city.
25 (b) Investment of funds.--Subject to the provisions of any
26 agreements with obligees of the authority, all funds of the
27 authority, including the proceeds of bonds, which are not
28 required for immediate use may be invested in obligations of an
29 assisted city or in obligations of the Federal Government or of
30 the Commonwealth or obligations which are legal investments for
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1 Commonwealth funds. However, no moneys may be invested in
2 obligations issued by or obligations guaranteed by an assisted
3 city without the approval of a qualified majority of the board,
4 and, in any case, no moneys held in a debt service reserve fund
5 may be invested in obligations issued by or obligations
6 guaranteed by an assisted city.
7 (c) Pledges from city.--To further secure repayment of
8 obligations of an assisted city to the authority, such city is
9 authorized to pledge or direct, and the authority is authorized
10 to receive directly from the collector of such taxes or
11 revenues, city taxes and other revenues otherwise payable to the
12 city and so directed or pledged.
13 Section 312. Payment of proceeds of tax levied for authority
14 purposes.
15 The proceeds of any tax levied for authority purposes or made
16 available for use by the authority which tax proceeds shall have
17 been pledged by the authority to secure its bonds and collected
18 by the Department of Revenue shall be transferred by the State
19 Treasurer at the times provided by law to the bond payment
20 account established pursuant to section 314, to a debt service
21 reserve fund established under the authority of section 313, to
22 the authority for payment of operating expenses in the amount
23 permitted pursuant to section 206 and then to the city account
24 established pursuant to section 314, all in the manner provided
25 in this act, subject to any limitations set forth in the
26 resolution of the authority authorizing such bonds.
27 Section 313. Debt service reserve fund.
28 (a) Authorization.--The authority may establish one or more
29 debt service reserve funds into which it shall deposit:
30 (1) The proceeds of any tax levied for authority
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1 purposes or made available for use by the authority in excess
2 of amounts required to be deposited in the bond payment
3 account pursuant to section 314.
4 (2) Proceeds from the sale of bonds, to the extent
5 provided in the resolution or resolutions authorizing such
6 bonds.
7 (3) Any other moneys made available to the authority
8 from any source for such purpose.
9 All moneys held in any debt service reserve fund, except as
10 provided hereafter, shall be used when required solely for the
11 payment of the principal of bonds secured in whole or in part by
12 such fund or of the sinking fund payments, if any, with respect
13 to such bonds, the purchase or redemption of such bonds, the
14 payment of interest on such bonds or the payment of any
15 redemption premium required to be paid when such bonds and notes
16 are redeemed prior to maturity. Any debt service reserve fund
17 established pursuant to this section shall be a trust fund held
18 for the benefit and security of the obligees of the authority
19 whose bonds are secured by such fund. Moneys in a debt service
20 reserve fund shall not be withdrawn from the fund at any time in
21 an amount that would reduce the amount of the fund to less than
22 the minimum reserve fund requirement established for such fund
23 in the resolution of the authority creating such fund except for
24 withdrawals for the purpose of making payments when due of
25 principal, interest, redemption premiums and sinking fund
26 payments, if any, with respect to such bonds for the payment of
27 which other moneys of the authority are not available. Any
28 income or interest earned by or increments to any debt service
29 reserve fund due to the investment thereof may be transferred by
30 the authority to other funds or accounts of the authority to the
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1 extent such transfer does not reduce the amount of the debt
2 service reserve fund below the minimum reserve fund requirement
3 established for such fund. Funds transferred to other accounts
4 in accordance with the preceding requirements may be used for
5 whatever purposes the authority deems appropriate so long as
6 such purposes are consistent with this act and the contracts of
7 the authority with obligees of the authority and with assisted
8 cities.
9 (b) Bond limitation.--The authority shall not at any time
10 issue bonds secured in whole or in part by a debt service
11 reserve fund if issuance of such bonds would cause the amount in
12 the debt reserve fund to fall below the minimum reserve
13 requirement for such fund unless the authority at the time of
14 issuance of such bonds shall deposit in the fund an amount from
15 the proceeds of the bonds to be issued or from other sources
16 which when added to the amount already in such fund will cause
17 the total amount on deposit in such fund to equal or exceed the
18 minimum reserve fund requirement. For the purposes of this
19 section, the term "minimum reserve fund requirement" shall mean
20 that amount defined as the minimum reserve fund requirement in
21 the resolution or resolutions of the authority authorizing the
22 bonds.
23 Section 314. Bond payment account and city account.
24 (a) Payment of certain tax revenue.--When bonds or payments
25 due to the authority from a city are secured by and payable from
26 a tax or taxes levied for authority purposes or made available
27 for use by the authority or levied by the assisted city, which
28 tax has been pledged by the authority to secure payment of such
29 bonds or by the assisted city to secure payments due to the
30 authority, the proceeds of such taxes shall be paid by the
20000H2435B3279 - 68 -
1 collector or receiver of such taxes directly to the bond payment
2 account, any debt service reserve fund established pursuant to
3 section 313 and the city account of the authority which are
4 hereby directed to be established by the authority as trust
5 funds with a bank with trust powers or a trust company with a
6 place of business in the Commonwealth selected by the authority.
7 Any payments of authority operating expenses in amounts
8 permitted pursuant to section 206 shall be paid to or on the
9 order of the authority after required payments to the bond
10 payment account and any debt service reserve fund and before any
11 payments to the city account. Such payments of authority
12 operating expenses shall be no more frequent than monthly and
13 shall be subject to any further limitation set forth in any
14 agreement of the authority with the obligees of the authority.
15 (b) Bond payment account as trust fund.--The bond payment
16 account shall be a trust fund held for the exclusive and equal
17 and ratable benefit of the holders of the bonds of the authority
18 secured by and payable from the proceeds of any tax pledged by
19 the authority or secured by the payments due to the authority
20 from the city as described in subsection (a). The authority
21 shall establish a payment schedule for the deposit of amounts
22 sufficient to accumulate the interest and principal becoming due
23 on such bonds in each fiscal year of the authority, and the
24 first moneys received from such tax or other pledged revenues
25 shall be deposited in the bond payment account until the payment
26 requirement established for the bonds has been met. Any proceeds
27 of such tax or other pledged revenues in excess of the scheduled
28 deposit shall be transferred first to the debt service reserve
29 fund or funds of the authority established under section 313 to
30 cure any deficiency in such fund. Any remaining proceeds shall
20000H2435B3279 - 69 -
1 be paid to the authority in the amount permitted for authority
2 operating expenses pursuant to section 206 and subsection (a),
3 and the excess shall be transferred to the city account. If at
4 any time proceeds of the tax are insufficient to meet the
5 scheduled deposit requirement, all proceeds of the tax shall be
6 paid into the bond payment account until all deficiencies have
7 been restored. Income on investments of moneys on deposit in the
8 bond payment account shall be retained in such account and
9 applied when earned to reduce future deposit requirements.
10 (c) Status of city account.--The city account shall be a
11 trust fund held for the exclusive benefit of an assisted city.
12 Any proceeds of the taxes or other revenues pledged to secure
13 the bonds or to secure payments due from the city to the
14 authority in excess of the payment requirements for the bond
15 payment account and in excess of any amount required to cure a
16 deficiency in the debt service reserve fund or funds established
17 pursuant to section 313 and in excess of any amount permitted to
18 be paid to the authority for authority operating expenses
19 pursuant to section 206 and subsection (a) shall be deposited in
20 the city account. Amounts in the city account shall be invested
21 at the direction of an assisted city in investments permitted by
22 this act. Subject to any suspension of disbursements pursuant to
23 section 210(e), amounts in the city account shall be disbursed
24 to an assisted city not less often than monthly for credit to
25 such city's general fund for application to the general expenses
26 of government or for deposit in an operating reserve of such
27 city if such operating reserve is created pursuant to an
28 intergovernmental cooperation agreement.
29 Section 315. Other funds and accounts.
30 (a) Authorization.--The authority shall create such other
20000H2435B3279 - 70 -
1 funds and accounts as may be necessary or desirable for its
2 corporate purposes and shall pay into each such fund or account
3 any moneys of the authority available for such purposes or any
4 moneys made available by any other person for the purposes of
5 such fund or account. No other provision of this act shall be
6 construed to prohibit the authority from creating within any
7 fund one or more accounts which may be used or pledged by the
8 authority for a special purpose.
9 (b) Use of fund money.--Any moneys deposited in any fund
10 created by the authority to be used to pay debt service,
11 including, without limitation, the bond payment account, any
12 sinking fund or debt service reserve fund and all investments
13 and proceeds of investments thereof shall, without further
14 action or filing, be subjected to a perfected security interest
15 for the obligees of the authority for whom such fund is held
16 until such moneys or investments shall be properly disbursed in
17 accordance with this act and with the terms of the contract of
18 the authority with its obligees.
19 Section 316. Exchange of bonds for obligations of city.
20 (a) Debt exchange.--The bonds of the authority may be issued
21 in exchange for obligations issued by an assisted city in such
22 manner and from time to time as may be determined by a qualified
23 majority of the board, and the authority may pay all expenses,
24 premiums and commissions incident to such exchange which the
25 authority deems necessary or appropriate.
26 (b) Limitation.--The authority shall not exchange any of its
27 bonds for obligations of a city unless:
28 (1) such city shall have entered into an
29 intergovernmental cooperation agreement with the authority;
30 and
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1 (2) the authority shall have determined that the terms
2 of such exchange will not prejudice the rights of holders of
3 other bonds and notes of such city.
4 (c) Authority action.--Upon receipt of the obligations of
5 the city so exchanged, the authority may hold such obligations
6 and receive all payments of principal and interest thereon or
7 may deliver all or a portion of such obligations to the city or
8 its fiscal agent for cancellation without receiving payment of
9 principal or interest on such obligations, in which event the
10 city or its fiscal agent shall cancel such obligations and the
11 city shall have no further liability with respect thereto.
12 Section 317. Initial issue of authority bonds.
13 (a) Availability of proceeds.--The first series of bonds to
14 be issued by the authority to finance a deficit, other than a
15 cash flow deficit and other than the interim financing
16 arrangement authorized in section 203, shall be issued in such
17 manner and time so that the net proceeds of such bonds shall be
18 available on or before June 30, 2000, or as soon as practicable
19 thereafter, in an amount not less than the amount reasonably
20 estimated by the city requesting the issuance of such bonds, to
21 be its deficit for the fiscal year ending June 30, 2000.
22 (b) Amendment to city budget.--As of the effective date of
23 this act, such city shall be authorized to amend its budgets for
24 the fiscal years ending June 30, 2000, and June 30, 2001, to
25 adjust appropriations in anticipation of receipt of the proceeds
26 of the first series of bonds to be issued in accordance with
27 subsection (a) and the proceeds of any tax levied pursuant to
28 Chapter 5. The amendments, if any, shall be considered revisions
29 to the city's financial plan and shall be subject to the
30 authority's approval under section 209.
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1 Section 318. Payment of taxes with authority bonds.
2 If the resolution of the authority authorizing or awarding
3 bonds shall so provide, with the approval of the mayor or chief
4 executive officer of the assisted city, the authority may issue
5 bonds which shall, upon maturity, at the election of the holder
6 thereof if so provided in such bonds, be receivable at full face
7 value and in lieu of cash in payment of any tax which is pledged
8 as security for such bonds or as security for any agreement
9 between the authority and such city securing the bonds, any
10 installment of estimated tax so pledged to secure such bonds or
11 payment or any interest or penalties thereon. Any bonds of the
12 authority so received in payment of any such tax or installment
13 of estimated tax or interest or penalties shall be presented to
14 the authority for tender to the appropriate collector of such
15 taxes.
16 Section 319. Final date for issuance of bonds.
17 No bond shall be issued for the purpose of financing a
18 capital project or a deficit, other than a cash flow deficit, on
19 a date later than December 31, 2003. No bond shall be issued for
20 the purpose of financing a cash flow deficit on a date later
21 than December 31, 2005. The limitations provided in this section
22 shall not apply to any bond to be issued to refund an
23 outstanding bond issued under this act.
24 Section 320. City payment of authority bonds.
25 An assisted city shall have the right at any time to deposit
26 funds with the authority in an amount sufficient to pay for the
27 defeasance of all or part of the authority's bonds. The assisted
28 city depositing funds with the authority pursuant to this
29 section shall have the right to designate to the authority the
30 maturities of bonds or portions thereof subject to defeasance by
20000H2435B3279 - 73 -
1 such deposit. If an assisted city pays to the authority an
2 amount sufficient to pay for the defeasance of all of the
3 authority's bonds, the assisted city shall be deemed to have no
4 further obligations under this act.
5 CHAPTER 4
6 TAX ANTICIPATION NOTES
7 Section 401. Tax anticipation notes of cities of second class.
8 Notwithstanding any other provision of law, each city shall
9 have the power and authority, by determination adopted by a
10 majority of the loan committee, to borrow money from time to
11 time in any fiscal year in anticipation of the receipt of
12 current taxes or current revenues, or both, to evidence the
13 obligation by tax anticipation notes, appropriately designated,
14 and to authorize, issue and sell such notes in the manner and
15 subject to the limitations provided in this chapter. Notes
16 issued in anticipation of taxes shall be designated "tax
17 anticipation notes," notes issued in anticipation of other
18 revenues shall be designated "revenue anticipation notes" and
19 notes issued in anticipation of taxes and revenues shall be
20 designated "tax and revenue anticipation notes." Obligations
21 evidenced by tax anticipation notes shall not be deemed to be
22 debt of a city subject to the limitations of Article 9 of the
23 Constitution of Pennsylvania. The power set forth in this
24 article to borrow from time to time shall include, but not be
25 limited to, the power to make a single authorization and then
26 issue and sell portions of such amount of authorized tax
27 anticipation notes whenever desired during the fiscal year.
28 Negotiations for tax anticipation notes may be commenced not
29 more than 30 days prior to the beginning of a fiscal year, but
30 all tax anticipation notes shall be issued and mature within the
20000H2435B3279 - 74 -
1 same fiscal year.
2 Section 402. Limitation on amount of tax and revenue
3 anticipation notes.
4 No city shall authorize or issue tax anticipation notes in
5 any one fiscal year which in the aggregate shall exceed 85% of:
6 (1) in the case of notes solely payable from and secured
7 by a pledge of taxes, the amount of such taxes levied for the
8 current fiscal year;
9 (2) in the case of notes solely payable from and secured
10 by a pledge of revenues other than tax revenues, the amount
11 of such revenues pledged; or
12 (3) in the case of notes payable from and secured by a
13 pledge of taxes and other revenues, the sum of such taxes
14 levied and such revenues pledged;
15 which, in all cases, are certified, pursuant to section 406, as
16 remaining to be collected or received in such fiscal year during
17 the period when the notes will be outstanding. The certificate
18 shall be as of a date not more than 30 days prior to and no
19 later than the date of the adoption of the determination of the
20 loan committee authorizing the issue and sale of the tax
21 anticipation notes. In computing the aggregate amount of tax
22 anticipation notes outstanding at any given time during the
23 fiscal year for the purpose of the limitation imposed by this
24 section, allowance shall be made for such notes as have already
25 been fully paid and for amounts already paid into a sinking fund
26 or trust fund established for payment of such notes, if any.
27 Section 403. Limitation on stated maturity date of tax and
28 revenue anticipation notes; time of payment of
29 interest.
30 No tax anticipation notes shall be stated to mature beyond
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1 the last day of the fiscal year in which such tax anticipation
2 notes are issued. Interest on tax anticipation notes from the
3 date thereof shall be payable at the maturity of such notes or
4 payable in installments at such earlier dates and at such annual
5 rate or rates, fixed or variable, as the loan committee by a
6 majority of its members may determine.
7 Section 404. Other terms of tax and revenue anticipation notes.
8 Tax anticipation notes shall be issued in such denomination,
9 shall be subject to such rights of prior redemption, shall have
10 such privileges of interchange and registration, shall be dated,
11 shall be stated to mature on such dates and in such amounts,
12 shall be in registered or bearer form with or without coupons or
13 in certificated or book-entry-only form, shall be payable in
14 such medium of payment and shall be payable at such place or
15 places, all as the loan committee, by a majority of its members,
16 may determine.
17 Section 405. Security for tax and revenue anticipation notes;
18 sinking fund or trust fund.
19 (a) Security.--All tax anticipation notes issued in a single
20 fiscal year shall be equally and ratably secured by the pledge
21 of, security interest in, and a lien and charge on, the taxes or
22 revenues or both of the city specified in the authorizing
23 determination to be collected or received during the period when
24 the notes will be outstanding. Such pledge, lien and charge
25 shall be fully perfected as against the city, all creditors
26 thereof and all third parties in accordance with the terms of
27 such authorizing determination from and after the filing of a
28 financing statement or statements in accordance with 13 Pa.C.S.
29 (relating to commercial code). For the purpose of such filing,
30 the sinking fund depositary or trustee of a trust fund for note
20000H2435B3279 - 76 -
1 payments, if any, otherwise the fiscal agent or paying agent
2 designated in the notes, may act as the representative of
3 noteholders and, in such capacity, execute and file the
4 financing statement and any continuation or termination
5 statements as secured party. The authorizing determination may
6 establish one or more sinking funds or trust funds for payment
7 of notes and provide for periodic or other deposits therein and
8 may contain such covenants or other provisions as the loan
9 committee, by a majority of its members, shall determine. The
10 amount of any tax anticipation notes issued in compliance with
11 this chapter shall be general obligations of the city and, if
12 the same shall not be paid within the fiscal year in which such
13 notes were issued as required by section 403, shall be included
14 in the budget of the city for the ensuing fiscal year and shall
15 be payable from the taxes and revenues of such ensuing year.
16 (b) Enforcement of notes.--The holder of such tax
17 anticipation notes issued by a city or the sinking fund
18 depositary of the applicable sinking fund, or trustee of any
19 trust fund for note payment, if any, shall have the right to
20 enforce such pledge of, security interest in and lien and charge
21 on the pledged taxes and revenues of the city against all
22 governmental agencies in possession of any of such taxes and
23 revenues at any time which taxes and revenues may be collected
24 directly from such officials upon notice by such holder or
25 depositary or trustee for application to the payment thereof as
26 and when due or for deposit in the applicable sinking fund or
27 trust fund at the times and in the amounts specified in such tax
28 anticipation notes. Any government agencies in possession of any
29 of such taxes and revenues shall make payment, against receipt
30 therefor, directly to the holder of such tax anticipation notes
20000H2435B3279 - 77 -
1 or to such depositary or trustee upon such notice and shall
2 thereby be discharged from any further liability or
3 responsibility for such taxes and revenues. If such payment
4 shall be to a holder of tax anticipation notes, it shall be made
5 against surrender of the notes to the payor for delivery to the
6 city in the case of payment in full; otherwise, it shall be made
7 against production of the notes for notation thereon of the
8 amount of the payment. The provisions of this subsection with
9 respect to the enforceability and collection of taxes and
10 revenues which secure tax anticipation notes of a city shall
11 supersede any contrary or inconsistent statutory provision or
12 rule of law. This chapter shall be construed and applied to
13 fulfill the legislative purpose of clarifying and facilitating
14 temporary borrowings by a city by assuring to holders of tax
15 anticipation notes the full and immediate benefit of the
16 security therefor without delay, diminishment or interference
17 based on any statute, decision, ordinance or administrative rule
18 or practice.
19 (c) Limitation on previously pledged security.--
20 Notwithstanding the foregoing, no taxes or revenues pledged to
21 secure bonds of the authority or to secure payments due to the
22 authority from a city pursuant to an agreement with the
23 authority shall be pledged to secure payment of tax anticipation
24 notes unless such pledge is, by its express terms, subordinate
25 in all respects to the pledge of such taxes and revenues to
26 secure the bonds of the authority or payments due to the
27 authority and the written consent of the authority to such
28 subordinated pledge is obtained prior to the issuance of the tax
29 anticipation notes so secured. The holder of such tax
30 anticipation notes so secured by a subordinated pledge described
20000H2435B3279 - 78 -
1 in this subsection shall have no right to enforce such pledge in
2 the manner described in subsection (b) unless all payments due
3 to the authority or due on the bonds of an authority secured by
4 the senior pledge of such taxes and revenues shall have been
5 made or provided for.
6 Section 406. Certification as to taxes and revenues to be
7 collected.
8 Prior to each authorization of tax anticipation notes, the
9 treasurer of the city shall make an estimate of the moneys to be
10 received during the period when such notes will be outstanding
11 from taxes then levied and assessed, and revenues, including,
12 without limitation, subsidies or reimbursements to be received.
13 Such estimate shall take due account of the past and anticipated
14 collection experience of the city and of current economic
15 conditions. The estimate shall be certified by the treasurer,
16 and the written certificate of the treasurer, dated as of a date
17 not more than 30 days prior to the date of the authorization of
18 the notes, shall be filed with the proceedings authorizing the
19 tax anticipation notes with the fiscal agent, sinking fund
20 depositary, trustee or paying agent for the notes or the
21 authority as provided in section 408.
22 Section 407. Sale of tax anticipation notes.
23 Tax anticipation notes may be sold at public, private or
24 invited sale and at such price or prices as the loan committee
25 by a majority of its members shall determine. At the time of
26 delivery of each issue, series or subseries of tax anticipation
27 notes, the treasurer of the city shall certify to the original
28 purchasers thereof that the amount of all such notes to remain
29 outstanding will not exceed the limitations of section 402
30 calculated, however, from the date of such certificate to the
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1 respective maturity dates of all such notes to remain
2 outstanding. Such certificate shall be retained by the city
3 until all tax anticipation notes issued during the fiscal year
4 shall have been paid in full.
5 Section 408. Filing of proceedings with authority.
6 While any bonds of the authority are outstanding, prior to
7 the delivery of tax anticipation notes to the original
8 purchasers thereof, the city shall file with the authority:
9 (1) the transcript of proceedings authorizing the
10 issuance of the tax anticipation notes, consisting of the
11 determination authorizing the notes;
12 (2) the certificate required by section 406 as to the
13 amount of taxes and revenues to be collected during the term
14 of the tax anticipation notes;
15 (3) the certificate required by section 407; and
16 (4) a true copy of the accepted proposal for the
17 anticipation notes.
18 Section 409. Purchase of tax anticipation notes by authority.
19 Subject to the limitations of this act, the authority is
20 authorized with the approval of a qualified majority of the
21 board to purchase tax anticipation notes of a city and to assign
22 its rights to receive payment on such notes and the pledge of
23 and security interest in the taxes and revenues of the city
24 securing such tax anticipation notes.
25 Section 410. Failure to pay principal or interest.
26 If a city fails to pay principal or interest on any of its
27 tax anticipation notes as the same becomes due and payable
28 whether at the stated maturity date or upon a mandatory or
29 unrevoked call for prior redemption and such failure shall
30 continue for 30 days, the holder thereof shall, subject to the
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1 priorities created under this act and the provisions of any
2 outstanding obligations of the city and to any limitation upon
3 individual rights of action in the determination authorizing the
4 tax anticipation notes, have the right to recover the amount due
5 by action in the court of common pleas. The judgment recovered
6 shall have an appropriate priority upon the moneys next coming
7 into the treasury of the city.
8 Section 411. Remedies of holders of tax and revenue
9 anticipation notes.
10 A holder of tax and revenue anticipation notes shall have the
11 right, in addition to all other rights which may be conferred on
12 such holder, subject only to any contractual restrictions
13 binding upon such holder:
14 (1) By mandamus, suit, action or proceeding at law or in
15 equity, to compel the city, the loan committee and the
16 members thereof and the officers, agents or employees thereof
17 to perform each and every term, provision and covenant
18 contained in any note or contract of the city with or for the
19 benefit of such holder and to require the carrying out of any
20 or all such covenants and agreements of the city and the
21 fulfillment of all duties imposed upon the city by this act.
22 (2) By proceeding in equity, to obtain an injunction
23 against any acts or things which may be unlawful or the
24 violation of any of the rights of such holder of tax and
25 revenue anticipation notes.
26 (3) To require the city to account as if it were the
27 trustee of an express trust for the holders of tax and
28 revenue anticipation notes for any pledged taxes or revenues
29 received.
30 CHAPTER 5
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1 OPTIONAL SALES AND USE TAX
2 Section 501. Definitions.
3 The following words and phrases when used in this chapter
4 shall have the meanings given to them in this section unless the
5 context clearly indicates otherwise:
6 "Department." The Department of Revenue of the Commonwealth.
7 "Tax." The tax authorized to be imposed by the governing
8 body of a city under this chapter.
9 Section 502. Construction of chapter.
10 The tax imposed by the governing body of a city pursuant to
11 this chapter shall be in addition to any tax imposed by the
12 Commonwealth pursuant to Article II of the act of March 4, 1971
13 (P.L.6, No.2), known as the Tax Reform Code of 1971. Except for
14 the differing situs provisions under section 504, the provisions
15 of Articles II and II-A of the Tax Reform Code of 1971 shall
16 apply.
17 Section 503. Imposition of additional tax.
18 (a) Sales.--The governing body of a city may levy, assess
19 and collect upon each separate sale at retail of tangible
20 personal property or services, as defined in Article II of the
21 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
22 of 1971, within that city a tax on the purchase price. The tax
23 shall be collected by the vendor from the purchaser and shall be
24 paid over to the Commonwealth as provided in this chapter.
25 (b) Use.--In any city which imposes the tax authorized in
26 subsection (a), there shall be levied, assessed and collected
27 upon the use, within that city, of tangible personal property
28 purchased at retail, and on services purchased at retail, as
29 defined in Article II of the Tax Reform Code of 1971, a tax on
30 the purchase price. The tax shall be paid over to the
20000H2435B3279 - 82 -
1 Commonwealth by the person who makes such use. The use tax
2 imposed pursuant to this chapter shall not be paid over to the
3 Commonwealth by any person who has paid the tax imposed by
4 subsection (a) or has paid the tax imposed by this subsection to
5 the vendor with respect to such use.
6 (c) Hotel.--In any city which imposes a tax authorized in
7 subsection (a), there shall be levied, assessed and collected an
8 excise tax on the rent upon every occupancy of a room or rooms
9 in a hotel in the city. The tax shall be collected by the
10 operator or owner from the occupant and paid over to the
11 Commonwealth.
12 (d) Rate and uniformity.--
13 (1) The tax authorized by subsections (a), (b) and (c)
14 may be imposed at a rate of either 0.5% or 1%.
15 (2) The tax imposed by subsections (a), (b) and (c)
16 shall be uniform.
17 (e) Tax computation.--The tax imposed under subsections (a),
18 (b) and (c) shall be computed as follows:
19 (1) In cities imposing the tax authorized by this
20 section at the rate of 0.5%, the tax shall be computed as
21 follows:
22 (i) If the purchase price is $1 or less, no tax
23 shall be collected.
24 (ii) If the purchase price is $1.01 or more but less
25 than $3.01, 1¢ shall be collected.
26 (iii) If the purchase price is $3.01 or more but
27 less than $5.01, 2¢ shall be collected.
28 (iv) If the purchase price is $5.01 or more but less
29 than $7.01, 3¢ shall be collected.
30 (v) If the purchase price is $7.01 or more but less
20000H2435B3279 - 83 -
1 than $9.01, 4¢ shall be collected.
2 (vi) If the purchase price is $9.01 or more but less
3 than $10.01, 5¢ shall be collected.
4 (vii) If the purchase price is more than $10, 0.5%
5 of each $10 of purchase price plus the above bracket
6 charges upon any fractional part of a $10 increment shall
7 be collected.
8 (2) In cities imposing the tax authorized by this
9 section at the rate of 1%, the tax shall be computed as
10 follows:
11 (i) If the purchase price is 50¢ or less, no tax
12 shall be collected.
13 (ii) If the purchase price is 51¢ or more but less
14 than $1.51, 1¢ shall be collected.
15 (iii) If the purchase price is $1.51 or more but
16 less than $2.51, 2¢ shall be collected.
17 (iv) If the purchase price is $2.51 or more but less
18 than $3.51, 3¢ shall be collected.
19 (v) If the purchase price is $3.51 or more but less
20 than $4.51, 4¢ shall be collected.
21 (vi) If the purchase price is $4.51 or more but less
22 than $5.51, 5¢ shall be collected.
23 (vii) If the purchase price is $5.51 or more but
24 less than $6.51, 6¢ shall be collected.
25 (viii) If the purchase price is $6.51 or more but
26 less than $7.51, 7¢ shall be collected.
27 (ix) If the purchase price is $7.51 or more but less
28 than $8.51, 8¢ shall be collected.
29 (x) If the purchase price is $8.51 or more but less
30 than $9.51, 9¢ shall be collected.
20000H2435B3279 - 84 -
1 (xi) If the purchase price is $9.51 or more but less
2 than $10.01, 10¢ shall be collected.
3 (xii) If the purchase price is more than $10, 1% of
4 each $10 purchase price plus the above bracket charges
5 upon any fractional part of a $10 increment shall be
6 collected.
7 Section 504. Situs for imposition of tax.
8 (a) Situs for retail sales.--For purposes of this chapter
9 and except as otherwise provided in this subsection, a sale at
10 retail shall be deemed to be consummated at the place of
11 business of the retailer unless the tangible personal property
12 sold is delivered by the retailer or his agent to an out-of-
13 State destination or to a common carrier for delivery to an out-
14 of-State destination or the United States mails for delivery to
15 an out-of-State destination. In the event a retailer has more
16 than one place of business in this Commonwealth which
17 participates in the sale, the sale shall be deemed to be
18 consummated at the place of business of the retailer where the
19 initial order for the tangible personal property is taken even
20 though the order must be forwarded elsewhere for acceptance,
21 approval of credit, shipment or billing. A sale by a retailer's
22 employee shall be deemed to be consummated at the place of
23 business from which that employee works.
24 (b) Situs for vehicle, aircraft and motorcraft sales.--
25 Except as provided in Article II-A of the act of March 4, 1971
26 (P.L.6, No.2), known as the Tax Reform Code of 1971, the sale at
27 retail or use of a motor vehicle, trailer, semitrailer or mobile
28 home, as defined in 75 Pa.C.S. (relating to vehicles), or of a
29 motorboat, aircraft or other similar tangible personal property,
30 required under either Federal or State laws to be registered or
20000H2435B3279 - 85 -
1 licensed, shall be deemed to have been completed or used at the
2 address of the purchaser or user. The tax due shall be paid by
3 the purchaser or user directly to the Department of
4 Transportation at the time of making application for the
5 issuance of a certificate of title or directly to the department
6 if licensing by the Department of Transportation is not required
7 or obtained.
8 (c) Situs for utility services.--The sale or use of steam,
9 natural and manufactured gas, electricity and telephone and
10 telegraph service shall be deemed to occur at the service
11 address in the city, which is the address where the telephone
12 equipment is located and to which the telephone number is
13 assigned or where the telegraph originated or where the meter
14 which registers the service is located, without regard to where
15 the services are rendered.
16 Section 505. Licenses.
17 The license issued pursuant to Article II of the act of March
18 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, or
19 a separate license may be issued by the department for the
20 collection and reporting of the taxes imposed by section 503.
21 The license or licenses shall be nonassignable and subject to
22 renewal periodically at such times as may be required by the
23 department in regulations but in no event more frequently than
24 once within a five-year period. No fee shall be charged for
25 either a license or any renewal. Failure of any person to obtain
26 a license shall not relieve that person of liability to pay the
27 taxes imposed by this chapter.
28 Section 506. Rules and regulations.
29 (1) The rules and regulations promulgated under section
30 270 of the act of March 4, 1971 (P.L.6, No.2), known as the
20000H2435B3279 - 86 -
1 Tax Reform Code of 1971, shall be applicable to the taxes
2 imposed by section 503 insofar as such rules and regulations
3 are consistent with section 503.
4 (2) The department shall administer and enforce the
5 provisions of this chapter and is authorized to promulgate
6 and enforce rules and regulations not inconsistent with the
7 provisions of this chapter relating to any matter or thing
8 pertaining to the administration and enforcement of the
9 provision of this chapter. The department may prescribe the
10 extent to which any of such rules and regulations shall be
11 applied without retroactive effect.
12 (3) The department, to cover its costs of
13 administration, shall be entitled to retain a sum equal to
14 costs of collection and shall inform the city in writing
15 monthly of the sum retained and the costs of collection
16 reimbursed. To provide a timely forecast and assure
17 consideration of the sum retained, the department shall
18 estimate its costs of collection for the next succeeding
19 fiscal year and provide such estimates, with all supporting
20 detail, to the chairperson and minority chairperson of the
21 Appropriations Committee of the Senate and to the chairperson
22 and minority chairperson of the Appropriations Committee of
23 the House of Representatives, with a copy to the city and, in
24 the event that all or any part of the tax imposed pursuant to
25 this chapter is enacted as an intergovernmental cooperation
26 authority tax pursuant to Chapter 6, a copy shall be provided
27 to the authority. When the annual operating budget for the
28 department is submitted to the General Assembly, the
29 department shall also submit to the chairperson and minority
30 chairperson of the Appropriations Committee of the Senate and
20000H2435B3279 - 87 -
1 to the chairperson and minority chairperson of the
2 Appropriations Committee of the House of Representatives the
3 actual sums retained for costs of collection in the preceding
4 fiscal year, together with all supporting details.
5 Section 507. Exclusion from rate limitations.
6 Notwithstanding any other provision of law, the imposition of
7 the tax authorized by section 503 shall not cause a reduction in
8 the rate of tax imposed pursuant to Article XXXI-B of the act of
9 July 28, 1953 (P.L.723, No.230), known as the Second Class
10 County Code.
11 Section 508. Procedure and administration.
12 (a) Adoption of ordinance.--The governing body in any city
13 desiring to impose the tax authorized by section 503 shall adopt
14 an ordinance which shall state the tax rate and refer to this
15 chapter.
16 (b) Notification to department.--A certified copy of a city
17 ordinance shall be delivered to the department no later than 90
18 days prior to the effective date of that ordinance. The city
19 ordinance may have an effective date which is no earlier than
20 the 90th day following the effective date of this act.
21 (c) Copy of repeal ordinance.--A certified copy of a repeal
22 ordinance shall be delivered to the department at least 30 days
23 prior to the effective date of such repeal.
24 (d) Copy of rate change ordinance.--A certified copy of any
25 ordinance changing the rate of the tax imposed by section 503
26 shall be delivered to the department at least 90 days prior to
27 the effective date of such ordinance. Such rate changes shall be
28 effective on the first January 1st which occurs 90 days after
29 delivery of the rate change ordinance to the department.
30 Section 509. Dedication and disbursement.
20000H2435B3279 - 88 -
1 (a) Second Class City Sales and Use Tax Fund.--There is
2 hereby created a Second Class City Sales and Use Tax Fund. The
3 State Treasurer shall be custodian of the Second Class City
4 Sales and Use Tax Fund, which shall be subject to the provisions
5 of law applicable to funds listed in section 302 of the act of
6 April 9, 1929 (P.L.343, No.176), known as The Fiscal Code.
7 Except to the extent provided in Chapter 6, taxes imposed
8 pursuant to section 503 shall be received by the department and
9 paid to the State Treasurer and, along with interest and
10 penalties, less any collection costs allowed under this chapter
11 and any refunds and credits paid, shall be credited to the
12 Second Class City Sales and Use Tax Fund not less frequently
13 than every two weeks. During any period prior to the credit of
14 moneys to the Second Class City Sales and Use Tax Fund, interest
15 earned on moneys received by the department and paid to the
16 State Treasurer pursuant to this chapter shall be deposited into
17 the Second Class City Sales and Use Tax Fund. Moneys credited to
18 the Second Class City Sales and Use Tax Fund shall be at all
19 times property of the city and shall be distributed as provided
20 in this section. All moneys in the Second Class City Sales and
21 Use Tax Fund, including, but not limited to, moneys credited to
22 the fund pursuant to this section, prior year encumbrances and
23 the interest earned thereon, shall not lapse or be transferred
24 to any other fund, but shall remain in the Second Class City
25 Sales and Use Tax Fund and must be used exclusively as provided
26 in this section. Pending their disbursement to cities, moneys
27 received on behalf of or deposited into the Second Class City
28 Sales and Use Tax Fund shall be invested or reinvested as are
29 other funds in the custody of the State Treasurer in the manner
30 provided by law. All earnings received from the investment or
20000H2435B3279 - 89 -
1 deposit of such funds shall be credited to the Second Class City
2 Sales and Use Tax Fund.
3 (b) Disbursement to cities.--On or before the 10th day of
4 every month, the State Treasurer shall disburse to the city
5 imposing the tax under this chapter the total amount of moneys
6 which are, as of the last day of the previous month, contained
7 in the Second Class City Sales and Use Tax Fund.
8 CHAPTER 6
9 SECOND CLASS CITY FISCAL AUTHORITY TAX
10 Section 601. Imposition of authority tax.
11 (a) Tax imposed.--Notwithstanding anything contained in any
12 other law to the contrary, the governing body of any city is
13 hereby authorized to enact any combination of the following
14 taxes, exclusively for purposes of the authority:
15 (1) The tax authorized by Chapter 5.
16 (2) A realty transfer tax such as is now or as may be
17 hereafter enacted for general revenue purposes of the city.
18 (3) A tax on salaries, wages, commissions, compensation
19 or other income received or to be received for work done by
20 residents of the city.
21 (b) Rate.--The rate of any tax which is enacted for the
22 authority pursuant to this act, when combined with the rate of
23 the same tax, if any, enacted by the governing body for city
24 general revenue purposes, shall not exceed the maximum tax rate
25 for such tax, if any, established by the General Assembly. Any
26 tax enacted pursuant to this section shall be known as the
27 Second Class City Fiscal Authority Tax.
28 (c) Content of tax ordinance.--In any ordinance enacting
29 such taxes, the city shall pledge to and agree with each and
30 every obligee of the authority acquiring bonds secured by an
20000H2435B3279 - 90 -
1 authority pledge of such taxes that the city will not repeal the
2 tax or reduce the rate of such tax imposed for such authority
3 until all bonds so secured by the pledge of the authority,
4 together with the interest thereon, are fully paid or provided
5 for. Once the taxes authorized to be enacted by this section are
6 imposed by the city, the revenues from such taxes shall be
7 revenues and property of the authority and shall not be revenues
8 or property of the city. Such taxes shall be collected by the
9 Department of Revenue of the Commonwealth and shall not be
10 subject to the appropriations by the governing body of the city
11 or by the General Assembly.
12 Section 602. Duration of tax.
13 Any tax imposed under this chapter shall continue in effect
14 until all bonds of the authority which are secured by the
15 authority's pledge of such tax revenues are no longer
16 outstanding. For as long as any such bonds remain outstanding,
17 no governing body of a city shall repeal any ordinance or reduce
18 the rate of tax imposed for the authority under this act.
19 Section 603. Creation of fund and disbursement.
20 (a) Second Class City Fiscal Authority Tax Fund.--There is
21 hereby created a Second Class City Fiscal Authority Tax Fund.
22 The State Treasurer shall be custodian of the Second Class City
23 Fiscal Authority Tax Fund, which shall be subject to the
24 provisions of law applicable to funds listed in section 302 of
25 the act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
26 Code. Taxes imposed pursuant to section 601 of this act shall be
27 received by the Department of Revenue of the Commonwealth and
28 paid to the State Treasurer and, along with interest and
29 penalties, less any collection costs allowed under this chapter
30 and any refunds and credits paid, shall be credited to the
20000H2435B3279 - 91 -
1 Second Class City Fiscal Authority Tax Fund not less frequently
2 than every two weeks. During any period prior to the credit of
3 moneys to the Second Class City Fiscal Authority Tax Fund,
4 interest earned on moneys received by the department and paid to
5 the State Treasurer pursuant to this chapter shall be deposited
6 into the Second Class City Fiscal Authority Tax Fund. Moneys
7 credited to the Second Class City Fiscal Authority Tax Fund
8 shall be distributed as provided in subsection (b). All moneys
9 in the Second Class City Fiscal Authority Tax Fund, including,
10 but not limited to, moneys credited to the fund pursuant to this
11 section, prior year encumbrances and the interest earned
12 thereon, shall not lapse or be transferred to any other fund,
13 but shall remain in the Second Class City Fiscal Authority Tax
14 Fund, and shall at all times be the property of the authority,
15 and must be used exclusively as provided in this act. Pending
16 their disbursement to the authority, moneys received on behalf
17 of or deposited into the Second Class City Fiscal Authority Tax
18 Fund shall be invested or reinvested as are other funds in the
19 custody of the State Treasurer in the manner provided by law.
20 All earnings received from the investment or deposit of such
21 funds shall be credited to the Second Class City Fiscal
22 Authority Tax Fund.
23 (b) Disbursement to Second Class City Fiscal Authority.--At
24 least weekly, the State Treasurer shall disburse the total
25 amount of moneys which are, as of the close of business of the
26 previous week, contained in the Second Class City Fiscal
27 Authority Tax Fund as a result of the tax imposed pursuant to
28 section 601 to or upon the order of the authority and as
29 provided in section 312. The State Treasurer shall make the
30 initial disbursement pursuant to this subsection at the end of
20000H2435B3279 - 92 -
1 the third week of the month immediately following the effective
2 date of the ordinance imposing the Second Class City Fiscal
3 Authority Tax.
4 Section 604. Collection of Second Class City Fiscal Authority
5 Taxes.
6 (a) General rule.--The Department of Revenue of the
7 Commonwealth is charged with the administration, enforcement and
8 collection of any tax imposed pursuant to section 601 and shall
9 do so with respect to the tax authorized to be imposed by
10 Chapter 5, under the administration, enforcement and collection
11 procedures and subject to the fines, forfeitures, penalties and
12 interest charges all as are provided for in the act of March 4,
13 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, and
14 with respect to any other tax enacted under the authority of
15 this chapter, under the administration, enforcement and
16 collection procedures and subject to the fines, forfeitures,
17 penalties and interest charges as shall be specified in the
18 ordinance enacting such tax.
19 (b) Cost of collection.--The Department of Revenue of the
20 Commonwealth, to cover its costs of administration, shall be
21 entitled to retain a sum equal to costs of collection and shall
22 inform the authority in writing monthly of the sum retained and
23 the costs of collection reimbursed. To provide a timely forecast
24 and assure consideration of the sum retained, the Department of
25 Revenue of the Commonwealth shall estimate its costs of
26 collection for the next succeeding fiscal year and provide the
27 estimates, with all supporting details, to the chairperson and
28 minority chairperson of the Appropriations Committee of the
29 Senate and to the chairperson and minority chairperson of the
30 Appropriations Committee of the House of Representatives, with a
20000H2435B3279 - 93 -
1 copy to the authority. When the annual operating budget for the
2 Department of Revenue of the Commonwealth is submitted to the
3 General Assembly, the department shall also submit to the
4 chairperson and minority chairperson of the Appropriations
5 Committee of the Senate and to the chairperson and minority
6 chairperson of the Appropriations Committee of the House of
7 Representatives the actual sums retained for costs of collection
8 in the preceding fiscal year, together with all supporting
9 details.
10 (c) Appointment of agents.--Except for the collection and
11 enforcement of the tax authorized to be imposed by Chapter 5,
12 the Department of Revenue of the Commonwealth is authorized to
13 appoint as its agents, tax officers, clerks, collectors and
14 other assistants, including revenue and legal departments of
15 cities imposing a tax under this chapter, to collect and enforce
16 any tax, including interest and penalties, imposed under
17 authority of this chapter; provided, however, that any moneys
18 collected by any such agent shall not be commingled with any
19 other funds of such agent and must be segregated and paid over
20 to the Department of Revenue of the Commonwealth at least every
21 two weeks.
22 CHAPTER 7
23 MISCELLANEOUS PROVISIONS
24 Section 701. Appropriation.
25 The sum of $150,000 is hereby appropriated to the Second
26 Class City Fiscal Authority for the fiscal year July 1, 1999, to
27 June 30, 2000, for the purpose of providing operating funds for
28 the Second Class City Fiscal Authority. The appropriation in
29 this section is an advance which shall be repaid by the
30 authority from the sources described in section 206(c) as soon
20000H2435B3279 - 94 -
1 as is practicable and in no event later than June 30, 2002. The
2 General Assembly hereby declares that the advance of funds
3 appropriated in this section is the absolute limit of its legal
4 and moral obligations to the authority for any authority
5 obligations or expenses.
6 Section 702. Original and exclusive jurisdiction of Supreme
7 Court.
8 The Pennsylvania Supreme Court shall have exclusive
9 jurisdiction to hear any challenge to or to render a declaratory
10 judgment concerning the constitutionality of this act, the
11 contractual rights of the parties relating to bonds issued
12 pursuant to this act, or any action of the authority in issuing
13 or attempting to issue bonds, whether with respect to the
14 validity of the bonds, proper authorization of the bonds, the
15 validity of any covenants, agreements or contracts provided by
16 any resolution authorizing the bonds, or otherwise or any action
17 of a city in entering into agreements with the authority in
18 connection with the issuance of bonds by the authority. The
19 Supreme Court is authorized to take such action as it deems
20 appropriate, consistent with the Supreme Court retaining
21 jurisdiction over such a matter, to find facts or to expedite a
22 final judgment in connection with such a challenge or request
23 for declaratory relief.
24 Section 703. General rights and prohibitions.
25 Nothing in this act shall limit the rights or impair the
26 obligations of any city to comply with the provisions of any
27 contract in effect on the effective date of this act or shall in
28 any way impair the rights of the obligees of any city with
29 respect to any such contract.
30 Section 704. Nondiscrimination.
20000H2435B3279 - 95 -
1 The authority shall comply in all respects with the
2 nondiscrimination and contract compliance plans used by the
3 Department of General Services to assure that all persons are
4 accorded equality of opportunity in employment and contracting
5 by the authority and its contractors, subcontractors, assignees,
6 lessees, agents, vendors and suppliers.
7 Section 705. Emergency payment deferral.
8 (a) Application.--Notwithstanding any provision of law,
9 including, but not limited to, the act of December 18, 1984
10 (P.L.1005, No.205), known as the Municipal Pension Plan Funding
11 Standard and Recovery Act, municipal ordinance, municipal
12 resolution, municipal charter, pension plan agreement or pension
13 plan contract to the contrary, this section shall apply to a
14 city which has established and maintained, directly or
15 indirectly, a pension plan for the benefit of its employees,
16 irrespective of the manner in which the pension plan is
17 administered and to the respective pension plan.
18 (b) Legislative finding.--The General Assembly finds that
19 until such time as the authority has been established and is
20 able to provide necessary financial assistance to cities and
21 when there is imminent danger that a city will be unable to pay
22 its outstanding indebtedness and to provide basic services
23 critical to the health and safety of its inhabitants, it is
24 essential that the State exercise its sovereign power to
25 safeguard the vital interests of its people by precluding such
26 city from taking actions upon the existence of certain
27 conditions which would be against the general good of such city
28 and of the Commonwealth and that doing so is clearly for the
29 promotion of the commonweal, the general good of the public and
30 is a proper exercise of the sovereign right of the Commonwealth
20000H2435B3279 - 96 -
1 to protect lives, health, comfort and the general welfare of all
2 people of the Commonwealth.
3 (c) Funding of pension plans.--
4 (1) The Secretary of the Budget shall examine prior to
5 June 30, 2000, the financial condition of cities which have
6 established pension plans for the benefit of their employees
7 and shall determine based on such examination if any city's
8 payment of its minimum obligation to fund its pension plan
9 for the fiscal year ending June 30, 2000, is likely to cause
10 the city to be unable to pay, prior to the city's receipt of
11 the proceeds of the first series of bonds issued to finance a
12 deficit described in section 317, the following:
13 (i) principal of or interest on its outstanding
14 bonds or lease payments securing bonds of other
15 government agencies;
16 (ii) payroll; or
17 (iii) any other payments necessary to protect the
18 health and safety of the citizens of the city.
19 (2) If the Secretary of the Budget shall make such
20 determination with regard to a city, he shall notify the
21 chief financial officer of the city of his determination,
22 and, subject to the provisions of subsection (d), the city
23 shall be prohibited from discharging any unpaid, identifiable
24 minimum obligation to fund the pension plan of the city for
25 the fiscal year of the city beginning July 1, 1999, and
26 ending June 30, 2000, other than any such payment which has
27 been ordered to be paid by a court of competent jurisdiction
28 prior to the effective date of this act, unless:
29 (i) the city and the trustees of the pension fund
30 have reached agreement that the payment due to the
20000H2435B3279 - 97 -
1 pension fund for such fiscal year shall be discharged by
2 the city paying at least 10% of the amount owed by the
3 first of each month commencing July 1, 2000, until the
4 total amount due has been paid in accordance with such
5 payment schedule; or
6 (ii) until payment has been made upon the occurrence
7 of the earliest of:
8 (A) the authority either having issued bonds or
9 secured credit for such city and the city is in
10 receipt of the proceeds thereof which are permitted
11 to be used and are sufficient to make pension
12 payments;
13 (B) the city has issued and received the
14 proceeds of tax anticipation notes as authorized by
15 the General Assembly; or
16 (C) October 1, 2000.
17 (d) Deferral.--Whatever minimum obligation to fund the
18 pension plan of a city for the fiscal year of a city beginning
19 July 1, 1999, and ending June 30, 2000, remains unpaid as of
20 June 30, 2000, shall not constitute a failure or potential
21 failure to comply with the city's applicable funding standard
22 requirements in accordance with the act of December 18, 1984
23 (P.L.1005, No.205), known as the Municipal Pension Plan Funding
24 Standard and Recovery Act, and no cause of action in mandamus or
25 otherwise shall arise by virtue of the city's failure to pay its
26 minimum obligation within said fiscal year, provided that:
27 (i) the city complies with the provisions of the
28 agreement with the trustees of the pension fund or with
29 the other provisions of subsection (c); and
30 (ii) the city pays interest on any amount of its
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1 minimum obligation which remains unpaid as of June 30,
2 2000, which amount shall be added to the minimum
3 obligation of the city for the fiscal year beginning July
4 1, 2000, with interest from July 1, 1999, on any amount
5 remaining unpaid at a rate equal to the interest
6 assumption used for the actuarial valuation report or the
7 discount rate applicable to treasury bills issued by the
8 Department of Treasury of the United States with a six-
9 month maturity as of the last business day in June 2000,
10 whichever is greater, plus an additional 2% interest,
11 expressed as a monthly rate and compounded monthly.
12 (e) Waiver of pension review study requirements.--The
13 provisions of section 7 of the act of July 9, 1981 (P.L.208,
14 No.66), known as the Public Employee Retirement Study Commission
15 Act, are hereby waived and shall not apply to this act.
16 (f) Definitions.--Unless the context clearly indicates
17 otherwise, the definitions provided for in the act of December
18 18, 1984 (P.L.1005, No.205), known as the Municipal Pension Plan
19 Funding Standard and Recovery Act, shall apply to this section.
20 Section 706. Construction of act.
21 (a) Liberal construction.--The provisions of this act
22 providing for security for and rights and remedies of obligees
23 of the authority shall be liberally construed to achieve the
24 purposes stated and provided for by this act.
25 (b) Severability.--If any provision of the title or any
26 chapter, section or clause of this act, or the application
27 thereof to any person, party, corporation, public or private,
28 shall be judged invalid by a court of competent jurisdiction,
29 such order or judgment shall be confined in its operation to the
30 controversy in which it was rendered and shall not affect or
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1 invalidate the remainder of any provision of the title or any
2 chapter or any section or clause of this act, or the application
3 of any part thereof to any other person, party, corporation,
4 public or private, or circumstance, and, to this end, the
5 provisions of the title or any chapter, section or clause of
6 this act hereby are declared to be severable. It is hereby
7 declared as the legislative intent that this act would have been
8 adopted had any provision declared unconstitutional not been
9 included herein.
10 Section 707. Limitation of authority powers.
11 Except as provided in section 210(i), nothing contained in
12 this act shall be construed to confer upon the authority any
13 powers with respect to a school district.
14 Section 708. Repeals.
15 (a) Partial.--
16 Subchapter D of Chapter 2 of the act of July 10, 1987
17 (P.L.246, No.47), known as the Financially Distressed
18 Municipalities Act, is repealed as to cities of the second
19 class. The remainder of the Financially Distressed
20 Municipalities Act shall be suspended as to cities of the second
21 class until the termination of the authority established by this
22 act.
23 (b) General.--All other acts or parts of acts are repealed
24 insofar as they are inconsistent with this act.
25 Section 709. Effective date.
26 This act shall take effect immediately.
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